Rheinmetall Denel Munition (RDM) is poised to significantly benefit from a historic framework agreement for 155 mm artillery ammunition from the German military.
According to defenceWeb, a South African-based media, the contract, valued at up to €8.5 billion, marks the largest in Rheinmetall’s history and was signed on June 20 by Annette Lehnigk-Emden, President of the Federal Office of Bundeswehr Equipment, Information Technology and In-Service Support (BAAINBw), along with Rheinmetall representatives in Koblenz, Germany.
The primary objective of this substantial order is to replenish the Bundeswehr’s stocks and support Ukraine in its defense efforts. Deliveries are set to commence in early 2025, with the Federal Republic of Germany being the main purchaser. Additionally, partner countries including the Netherlands, Estonia, and Denmark are participating in the order.
An initial call-off from the framework contract has been made to ensure the capacity utilization of a new factory in Unterluess, Lower Saxony, Germany. This initial order, valued at approximately €880 million, includes the delivery of various 155 mm calibre projectiles, with deliveries also beginning in 2025. Rheinmetall plans to produce up to 700,000 artillery shells and 10,000 tonnes of powder annually at its facilities in Germany, Spain, South Africa, Australia, and Hungary.
RDM’s Role and Global Expansion
RDM, a key player in Rheinmetall’s global operations, is heavily involved in various contracts secured by its German parent company. This includes a €848 million multi-year contract for ammunition supply to the Hungarian armed forces and a €192 million contract for an explosives factory in Hungary. To meet the growing global demand for artillery ammunition, RDM is running 24-hour shifts at its South African plants and investing significantly in their expansion, increasing capacity from 100,000 to 150,000 shells annually.
Strategic Importance and Future Outlook
Armin Papperger, Chairman of the Executive Board of Rheinmetall AG, expressed his enthusiasm for the contract, highlighting its significance in reinforcing Rheinmetall’s position as a leading ammunition supplier. He emphasized the trust placed in Rheinmetall by the Federal Republic of Germany and its allies, noting that the framework contract ensures the necessary capacity utilization of the new Unterluess factory.
Papperger also underscored the Federal Government’s commitment to supporting the armed forces with reliable ammunition supplies, as evidenced by the framework contract and the new factory’s development. Rheinmetall aims to produce the entire value chain for artillery ammunition at the Unterluess site, offering a comprehensive solution from a single source.
Comprehensive Production Capabilities
Rheinmetall will produce the entire value chain for artillery ammunition in Unterluess, Lower Saxony, to offer the “full shot” by a single source. This includes the projectile, fuse, explosive charge, and propellant charge that propels the projectile out of the barrel when fired. The site is expected to achieve an annual capacity of 100,000 projectiles from the second year of production, with plans to increase this to 200,000 per year.
Addressing Global Demand
Rheinmetall has highlighted the immense demand for artillery ammunition, as evidenced by the ongoing conflict in Ukraine. The current production capacity in the western world is not designed to meet these quantities, prompting Germany and other countries to plan for large-scale procurement over an extended period.
Diverse Ammunition Portfolio
Rheinmetall’s artillery ammunition offerings include the DM121 explosive projectile, DM125 smoke projectile, and DM702 SMArt search fuse ammunition (produced in collaboration with Diehl Defence). Additionally, the portfolio features the RH68 training projectile and the RH1901 and RH1902 range-optimized smoke projectiles.
The versatile 155 mm Assegai artillery ammunition family from Rheinmetall Denel Munition includes insensitive ammunition (IM), conventional explosive projectiles (High Explosive/HE), as well as smoke, illumination, infrared illumination, and other projectiles. The entire Assegai ammunition spectrum can be used at ranges of around 40 kilometers.
This landmark contract solidifies Rheinmetall’s leading role in the global ammunition market. Last July, Rheinmetall Denel Munition (RDM), said it was working around the clock and investing significant funds to meet the global demand for artillery ammunition. The CEO of RDM, Jan-Patrick Helmsen, disclosed this information during a recent military attache demonstration at the company’s Boskop facility near Potchefstroom.
The German defence and technology giant, recently net a contract to supply a NATO country with 155mm ammunition. A long-time NATO customer awarded the South African subsidiary Rheinmetall Denel Munition a framework contract for the supply of 155mm ammunition of the proven Assegai product line.
Rheinmetall Denel Munition (RDM) is developing a ramjet-powered 155 mm artillery round that will have a range of 155 km. The round is still in the development phase, but RDM has already conducted some test firings. The company believes that the ramjet round will be able to achieve some of the longest ranges on the market.
Recently, an Asian customer ordered 400,000 rounds of 40 mm ammunition worth 25 million euros.
Rheinmetall also highlighted the noteworthy contracts of a multi-year supply of ammunition worth 848 million euros to the Hungarian armed forces and the delivery of an explosives factory valued at 192 million euros in the same country.
Overall, Rheinmetall’s operating profits grew by 27% in 2022 to reach 754 million euros, with a record order book of 26.6 billion euros. The group anticipates continued sales growth and stable high margins in 2023, projecting consolidated sales to rise from 6.4 billion euros in 2022 to 7.4-7.6 billion euros this year.