Mubadala and PIF-backed Saudi firm agree on aero and defence partnership

Partnership marks first advanced manufacturing collaboration between UAE and the kingdom

Mubadala and the Saudi Arabian Military Industries Company (SAMI) initiate first strategic collaboration on advanced manufacturing between the Kingdom of Saudi Arabia and United Arab Emirates. Courtesy Mubadala

Mubadala Investment Company and a Saudi Arabia-owned defence company agreed to partner and co-invest in defense manufacturing, the first strategic tie-up of its kind between the UAE and the kingdom.

Saudi Arabia Military Industries Company (SAMI) and the Abu Dhabi strategic investment firm signed a pact for collaboration on defence, manufacturing, maintenance, overhaul and repair, research and design and engineering, the companies said in a joint statement on Saturday. Mubadala will collaborate with SAMI to accelerate its development plans.

"We have identified a number of areas for potential partnership in the manufacturing, R&D and MRO space that can utilise the deep experience of the UAE in growing international partnerships and establishing a regional ecosystem," Badr Al Olama, director of aerospace and defense at Mubadala, said. "This partnership will enable us to optimise our resources, investments, highly-skilled local talent and overall competitiveness for our customers and partners by boosting global market access, integration and industrial excellence.”

The agreement comes as Saudi Arabia and the UAE push to develop a home-grown defence industry to diversify their economies, create jobs and transfer technical know-how from Western defence companies as part of the package for their arms deals.

The agreement with Mubadala also includes expanding aerospace and defence manufacturing across the Arabian Gulf, the companies said, without providing further details.

Saudi Arabia's sovereign wealth fund, the Public Investment Fund, created SAMI in 2017 to help decrease the country's reliance on foreign arms purchases. As part of the country's Vision 2030 plan for economic and social transformation, SAMI's mandate is to localise more than half of the kingdom’s total military spending, from about 2 per cent currently.

SAMI’s targets include contributing around 14 billion riyals ($3.7 bn) to the kingdom’s gross domestic product and creating more than 40,000 direct jobs locally by 2030.

Mubadala's defence and aerospace portfolio includes plane-parts maker Strata Manufacturing, Turbine Services & Solutions (TS&S)  and Emirates Defense Industries Company (EDIC).

"The collaboration will enable SAMI to further support the growth of both the aerospace and defense ecosystems in the kingdom through know-how and technology transfer between two leading industry players," Andreas Schwer, chief executive of SAMI, said.