# Rheinmetall Denel Munition to benefit from €8.5 billion German military contract

- Link: https://www.military.africa/2024/07/rheinmetall-denel-munition-to-benefit-from-e8-5-billion-german-military-contract/
- Published: 2024-07-23T08:46:07+01:00
- Author: Military Africa and Sarah Lesedi

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](https://www.military.africa/2022/04/rdm-to-supply-artillery-rounds-to-hungary/)
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](https://www.military.africa/2023/07/rheinmetall-denel-munition-is-expanding-to-meet-global-demand-for-artillery-ammunition/)
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.

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#### **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.

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This landmark contract solidifies Rheinmetall’s leading role in the global ammunition
market. Last July, Rheinmetall Denel Munition (RDM), [said it was working](https://www.military.africa/2023/07/rheinmetall-denel-munition-is-expanding-to-meet-global-demand-for-artillery-ammunition/)
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 ](https://www.military.africa/2023/01/rdm-sells-155mm-artillery-ammunition-to-nato-country/)
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.

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Rheinmetall Denel Munition (RDM) is [developing](https://www.military.africa/2023/08/rheinmetall-denel-munition-developing-ramjet-powered-155-mm-artillery-round/)
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](https://www.military.africa/2022/07/asian-country-orders-40mm-ammunition-from-rheinmetall/)
worth 25 million euros.

Rheinmetall also highlighted the noteworthy contracts of a multi-year [supply of ammunition worth 848 million euros to the Hungarian ](https://www.military.africa/2022/04/rdm-to-supply-artillery-rounds-to-hungary/)
armed forces and the delivery of an [explosives factory valued at 192 million euros](https://www.military.africa/2023/01/rdm-wins-hungarian-explosive-contract/)
in the same country.

Overall, [Rheinmetall’s operating profits grew](https://www.military.africa/2023/04/improved-sales-in-2022-highlight-the-potential-of-south-africas-defence-industry/)
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.

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