Saudi Arabian Military Industries (SAMI) recently announced that it has signed a memorandum of understanding (MoU) with Korean conglomerate Hanwha Group to explore the formation of a joint venture company (JVC) in the Kingdom of Saudi Arabia.
Set to be established as a limited liability company in Riyadh and tentatively named as SAMI-Hanwha Munitions Systems LLC, the proposed entity will initially focus on the manufacturing and sale of munitions within Saudi Arabia.
The JVC will later evaluate the possibility of furthering capability in technology and expanding its product lines to ammunition and weapons, rockets, artillery systems, combat vehicles, defense systems, naval systems, command, control, communications, computers, and intelligence (C4I) systems, and intelligence, surveillance and reconnaissance (ISR) systems.
The MoU was formally signed on June 26, 2019 by Dr. Andreas Schwer, CEO of Saudi Arabian Military Industries, and Mr. Sungsoo Lee, CEO of Hanwha Defense, who represents the Hanwha companies.
Hanwha Defense CEO said: “We have been working hard to see the fruition of our mutual engagement to localize Hanwha’s vast array of defense products: From munitions to land systems and defense electronics. Hanwha is fully committed to contributing its defense expertise to help achieve the Vision 2030 objectives.”
The Korean Hanwha Group
Hanwha Defense was launched on January 2019 from the merger of Hanwha Land Systems and Hanwha Defense Systems. With the merger, Hanwha Defense has acquired state-of-the-art technology in firepower, maneuverability, anti-aircraft, and unmanned systems.
Hanwha Defense is currently the supplier of many weapons systems to the South Korean Armed Forces, including the K9 self-propelled howitzer and the K105HT self-propelled howitzer. Hanwha Defense producing the K21 armored infantry fighting vehicle and 7 types of armored cars including the K200, K277 (for command post), K281/K242 (mortar equipped), K216 (CBR), K288 (rescue) and K221 (smoke grenade launchers).
In the anti-aircraft system, the group produces the 30mm self-propelled anti-aircraft defense system ‘BIHO’. It features the detection distance of 21km and excellent tracking and aiming capability against enemy aircraft. It carries four short-range Chunma surface-to-air missile systems with effective ranges of 6km.
Hanwha Defense is producing 81mm mortar ammunition, 60mm mortar ammunition, 155mm artillery precision guided ammunition, and short-range anti-tank launchers.
Hanwha aims to become the world’s top ten defense firm by increasing its arms sales to $10.4 billion by 2025.
The Saudi Arabian Military Industries (SAMI)
Saudi Arabia’s Public Investment Fund (PIF) announced on May 17, 2017, the launch of a state-owned military industrial company. The Saudi Arabian Military Industries (SAMI) is part of the kingdom’s 2030 Vision. SAMI aims to become one of the world’s top 25 defense companies by 2030.
The company will seek to localize 50 percent of total government military spending in the Kingdom by the year 2030, up from just 2 percent in 2017 and will seek to provide over 40,000 jobs by 2030. By partnering with universities, SAMI will provide students with apprenticeships and careers in cutting-edge technologies, which were previously unavailable in the Kingdom.
SAMI’s four business units (aeronautics, land systems, weapons and missiles, and defense electronics) complement the Kingdom’s future military requirements and build on existing local capabilities.
SAMI establishes companies through joint ventures with global original equipment manufacturers (OEMs), as well as cooperating with local military companies. It will consider creating new business units, to ensure the company is aligned with the latest developments in the military industries sector.
The Saudi Arabian Military Industries is headed by CEO Dr. Andreas Schwer. Schwer has also served on the management board of Airbus – particularly in the arms department – and in September 1, 2012, following a brief stay in the US, he joined the executive board of Rheinmetall Defense, where he was in charge of the Division Combat Systems department.
The new MoU comes as SAMI works on reinforcing its commitment to the localization of the domestic military industries.
The company plays an important role in boosting employment, a key pillar of Saudi Arabia’s economic overhaul agenda and it is expected to create 40,000 direct jobs and provide indirect roles to more than 150,000 people in the kingdom by 2030.
SAMI is planning investments in 25 to 30 joint ventures over the next few years to build competencies in shipyards, aircraft assembly lines, and other infrastructure. The Saudi company has set a target of reaching overall sales of $10 billion by 2025.
[Sources: Asharq al Awsat, Arab News, The Korea Herald, Reuters, The Trumpet, The National]