Rheinmetall Denel Munition (RDM) is running 24-hour-a-day shifts at its plants across South Africa and is investing hundreds of millions of rands in their expansion in order to keep up with the massive global demand for artillery ammunition.
This was revealed by RDM CEO Jan-Patrick Helmsen during a recent military attache demonstration at the company’s Boskop facility outside Potchefstroom. Helmsen explained that with the current unstable, uncertain world at the moment, countries are spending on their national security and the defence business globally is doing well. Particularly in Europe, the trend of shrinking defence budgets is reversing. Indeed, global military spending again exceeded $2 trillion last year.
There is huge demand for artillery around the world at present as countries are seeing that their magazines are empty and have realised they have little war stock. RDM has received tens of millions of euros worth of orders over the last year, mainly for 155 mm and 40 mm ammunition – one Asian customer recently ordered 400 000 rounds of 40 mm ammunition.
These orders are keeping the company’s 2 441 employees busy across its five sites: Laingsdale, which focuses on fuses and safe/arming devices, employs 160 people; the Wellington facility, which focuses on energetic explosive and raw materials, employs 185; the Somerset West facility, which produces multi-calibre propellant and 40 mm grenades, employs 1 202 people; Boskop does explosive loading, assembly and packing as well as plant engineering and employs 520 people; and Boksburg carries out steel forging of artillery and mortar shells and aircraft bomb cases and employs 374 people.
Boksburg has the capacity to produce 100 000 shells a year, but with a substantial investment of hundreds of millions of rands, the intention is to increase this to 150 000 shells a year, Helmsen told defenceWeb. The Somerset West facility can manufacture 400 000 charges a year, but the company aims to ramp this up to 600 000 a year.
RDM was established in 2008 after Rheinmetall acquired a 51% stake in the loss-making Denel Munitions. The 51% stake was important because it gave Rheinmetall control over the company and this is important as “we know how to make businesses,” Helmsen said. Although Denel is struggling at the moment, the new management has a plan to go big again, and RDM will support them and help them in the market.
Since establishment, RDM has been growing from strength to strength. In 2022, the Rheinmetall Group’s weapons and ammunition division recorded an operating result growth of 40%, as well as a new all-time high in incoming orders, amounting to around three billion euros. Two-thirds of the growth can be attributed to Rheinmetall Denel Munition. According to Rheinmetall, “this development clearly reflects the increased demand of ammunition by the armed forces of many countries, in Europe and elsewhere”.
For the group, the 848 million euro multi-year contract for the supply of various types of ammunition to the Hungarian armed forces and the 192 million euro contract for the delivery of an explosives factory in the same country are “particularly noteworthy”, with RDM heavily involved in these contracts.
As a whole, Rheinmetall saw operating profits grow by 27% in 2022 to 754 million euros, with a record order book of 26.6 billion euros. For 2023, the group expects that “sales will continue to grow with stable high margins”. In particular, consolidated sales are forecast to increase from 6.4 billion euros in 2022 to 7.4-7.6 billion euros this year.
Announcing its 2022 financial results earlier this year, Rheinmetall’s chief executive Armin Papperger said the group remains “on a very positive trajectory” and “takes responsibility in a changing world.” According to the CEO, “the epochal shift” triggered by the war by Russia against Ukraine has ushered in “a new era for Rheinmetall”. Numerous countries have recognized “the urgent need to step up their efforts for security”.