Rheinmetall Denel Munition (RDM) will invest R550-million over the next three years to modernise its production facilities to the latest standards, introduce state-of-the-art processes and increase its capacity, company CEO Norbert Schulze tells Engineering News. “We will likely recruit another 200 workers.” The company is enjoying strong growth in its business, which is dominated by exports. “Things are . . . exceptionally good for RDM. Since 2016, we have been growing at 20% a year. Under our plans, this will continue to 2020. Most of this is export business.”

RDM is 51%-owned by Germany’s Rheinmetall and 49% by South Africa’s Denel SOC, both of which are defence industrial groups (although Rheinmetall is also active in the automotive components sector). Rheinmetall is a private-sector enterprise and Denel is State-owned. “We are a South African company, despite our financial ownership by a German group,” he points out. “We have only two Germans in the company; all our other people are South Africans. We have facilities on four sites in South Africa, which we are constantly upgrading and modernising. These investments remain in South Africa and we cannot move them out of the country.”

RDM pays about R50-million in dividends every year, half of which goes to Rheinmetall in Germany and half to Denel. But the company also reinvests about R200-million every year into its activities and infrastructure in South Africa, including training and development, as well as product enhancements and innovation.

Only about 18% of the company’s business is local, with the South African National Defence Force (SANDF) accounting for 6% of total business, Denel 9% and the other 3% being attributed to civilian markets. “But the SANDF business is important because it gives us the reputational base that allows us to win exports,” he explains. At the moment, exports account for 82% of RDM’s business. Currently, the main market area is the Middle East, with Asia-Pacific in second place and Europe third.

“Our best-selling product lines at the moment are mortar bombs and artillery shells,” he reports. “Between them, these product ranges represent 70% of our business.” The split between the mortar bombs and artillery shells is roughly equal.

“We see a renaissance in mortar worldwide,” he highlights. “We are expecting this segment to grow substantially. By the end of this year, we will have a complete set of suites of mortar bombs, from 60 mm to 120 mm, qualified on the majority of mortar designs available on the market today.”

The company’s new range of medium-velocity grenades (fired from grenade launchers), unveiled two years ago, is attracting great international interest. The original low-velocity version had a maximum range of 400 m, but this has now been increased to 800 m. A new, air burst, version is under development at the request of potential customers. “We are in negotiations at the moment for contracts for our medium-velocity grenades and we expect to win contracts by the end of this year,” he states. “This is a brand-new concept, a brand-new product, developed in-house in RDM, in South Africa and a world first.”

RDM was created in 2008, when the then South African government decided to sell a majority stake in Denel’s lossmaking pyrotechnics business (shells, bombs, grenades, rocket motors and missile warheads) to a strategic partner. Rheinmetall was the successful bidder. The German group subsequently made major investments into its new, South African, subsidiary. “That decision has benefited the country, benefited the economy [and] created 2 000 direct jobs and 10 000 indirect jobs among our suppliers,” highlighted Schulze. “We buy nearly everything in South Africa; nothing is imported.

Relations with Denel, our minority shareholder, are excellent,” he observes.”