Publication: Business Day Issued: Date: 2007-01-03 Reporter: Linda Ensor Reporter:

SA Ties Up Missile Deal with Brazil For Denel, Armscor

 

Publication 

Business Day
Date 2007-01-03

Reporter

 Linda Ensor

Web Link

www.businessday.co.za

 

CAPE TOWN ­ A government-to-government agreement between SA and Brazil has been signed for a joint venture between Armscor, Denel and the Brazilian air force for the development of missiles.

The Brazilians have committed $52m *1 to the project, which will be led by Denel in collaboration with its Brazilian counterparts, Denel spokesman Sam Basch said at the weekend.

In total, the project has been estimated to be worth about R300m *1.

In terms of the agreement, Denel will develop its A-Darter short-range air-to-air missile from a prototype to an operational system *2.

Denel has already invested considerable sums in developing the missile prototype but has been constrained by a lack of funding to take it to the next stage.

Basch said the agreement, signed a week ago, was a further step in intensifying missile co-operation between Denel and the Brazilians, who opted for Denel as its partner because of Denel’s proven capability in the missile field.

Basch said Denel hoped that other projects would flow from the missile agreement. He said Brazil, for example, would in future require attack helicopters and could be interested in Denel’s Rooivalk.

Meanwhile, the finalisation of the Turkish government tender for attack helicopters has been postponed for the third time ­ this time until next month.

Denel is competing against the deal’s other preferred bidder *3, Agusta Aerospace of Italy, for the estimated $2bn tender.

Basch said no reasons were given by the Turkish government for the delay in reaching a decision, though he added that Turkey was known for taking a long time to finalise such matters.

Two rival bids, from French Eurocopter Tiger and Russian Kamov KA50-2, were eliminated in the tender.

Basch stressed that the delay had no financial or other implications for Denel as the contract had not been built into its budget or its restructuring programme, which is aimed at turning the loss-making arms manufacturer around to profit.

Winning the Turkish contract will ensure the survival of the Rooivalk, which has been sold only to the South African Air Force, which bought 12 helicopters in 1999. Since then Denel has not been successful in finding other buyers for the Rooivalk.

Denel made a fifth successive loss in its financial year to end March.

With acknowledgements to Linda Ensor and Business Day.


*1       $52m is greater than R300m; something don't wash here.

Also R300 million (turnover or nett profit) is not going to make a greater difference in alleviating Denel's R1 000 million a year loss.

But it's a start.


*2      This is why Denel loses (b)millions of Rands of taxpayers' money per year. If the SAAF had an operational requirement for the system, then they would fund the entire acquisition from prototype to fullscale production.

Foreign sales would be the cherry on the top, offsetting some of the cost and possibly allowing ongoing refinement and optimisation - which is always needed, especially where modern systems are signal processing and software driven.


*3      Who's got the deepest wonga splodging pockets, me thinks not Denel.