Paramount Group of South Africa plans to set up a US$100 million (Dh367.8m) manufacturing facility in Abu Dhabi with International Golden Group.
Capital targets military vehicles
Abu Dhabi companies are targeting an estimated market for more than 5,000 armoured vehicle sales in the region over the next five years.
Two joint ventures recently announced plans to set up local production facilities in the emirate in a move that is likely to make Abu Dhabi a regional hub for mine-resistant vehicles, part of broader plans to create a defence industrial base and diversify away from oil revenues.
"We see the region investing in peacekeeping activities and vehicles to protect their soldiers during those operations. We expect to sign very big deals this year," said Ivor Ichikowitz, the executive chairman of Paramount Group of South Africa.
Paramount plans to set up a US$100 million (Dh367.8m) manufacturing facility in Abu Dhabi with International Golden Group (IGG), an Abu Dhabi firm that partners international defence companies. A second joint venture by two UAE firms, the state-owned Tawazun Holding and the Bin Jabr Group, is establishing local production facilities to manufacture Nimr armoured vehicles.
Paramount expects "more than 10 opportunities" among countries in the region to sell its vehicles, and anticipated signing $1 billion in deals over the next two years. It showcased its latest vehicle, its "Mbombe" six-wheeled infantry fighting vehicle at the Idex defence exhibition in Abu Dhabi in February. The low-profile armoured vehicle offers better protection against IEDs, or improvised explosive devices, the company said.
The new plant would take six months to set up and could be followed by other projects with IGG, Mr Ichikowitz said. "The output will cater not just to the UAE, but also the Middle East and North Africa," he added.
Paramount already has manufacturing partnerships with Ashok Leyland in India and is to produce mine protection vehicles in Azerbaijan in partnership with Azerbaijan's ministry of defence industry.
"There's a potential for Abu Dhabi to become a sizeable defence manufacturing centre, and its geography bodes well for creation of industries," Mr Ichikowitz said. "We have high hopes in collaboration with South Africa to develop technology in the Gulf."
Last year, Tawazun Holdings purchased 60 per cent of Bin Jabr's Nimr vehicles unit, part of efforts to consolidate Abu Dhabi's defence industry that also included the purchase of an ammunitions business from Adcom Systems, and a 26 per cent stake in IGG.
The joint venture between Tawazun and Bin Jabr created a new company, Nimr Automotive, with plans to move production capabilities from Jordan to the Tawazun Industrial Park in the Abu Dhabi desert.
Other defence industries at the industrial park include Burkan Munitions Systems and Tawazun Precision Industries, which makes high-end components for the oil and gas, aerospace and defence industries.
Nimr Automotive received a major boost at the Idex expo when the UAE Armed Forces announced plans to buy 1,000 of its mine-resistant vehicles in a deal worth $92m. "We are now in the process of [creating] the factory in Abu Dhabi at Tawazun Industrial Park. It will be a very nice, modern factory," said Yousef al Sheybah, a retired UAE staff colonel and the general manager of marketing and development, defence and security at the Bin Jabr Group.
The Nimr platform incorporates US-made engines and transmissions.
In related news, the UAE also recently signed a deal with the Russian industrial manufacturer Rosoboronexport to modernise the Emirates' fleet of BMP-3 tanks, in a deal worth $74m. The UAE received about 600 BMPs, making it the largest operator of the vehicle after Russia. The deal covers the upgrade of 135 amphibious infantry fighting vehicles, to include new turbocharged engines and upgraded armour.
* with Bloomberg