Saudi defence firm to partner with Korea's Hanwha Group for munitions production in the kingdom

The new joint venture company will evaluate expanding its range of products

Sami signed an agreement with South Korean conglomerate Hanwha Group for a joint venture to produce munitions in the kingdom. Courtesy of Sami

Saudi Arabia entered a joint venture with South Korean conglomerate Hanwha Group to produce and sell munitions in the kingdom, as it seeks to meet a target of localising military spending.

Saudi Arabian Military Industries (Sami) signed a preliminary agreement with group affiliates Hanwha Corporation, Hanwha Defense and Hanwha Systems to set up Sami-Hanwha Munitions Systems in Riyadh, Sami said.

The joint venture will "help advance the kingdom's domestic aerospace and defence industries", said Andreas Schwer, chief executive of Sami. 
Sami, established by Saudi Arabia's sovereign wealth fund in 2017, has a mandate to localise more than half of the total military spending, up from about 2 per cent, by 2030. The target is part of the country's Vision 2030 to develop a local manufacturing industry as it seeks to wean the economy off its dependence on oil. Saudi Arabia is developing its nascent defence industry with a series of global joint ventures and partnerships to bring international expertise and knowledge to the kingdom.

The joint venture with Hanwha Group will study the potential of expanding its product lines to include ammunition and weapons, rockets, artillery systems, combat vehicles, defence systems, naval systems and intelligence, surveillance and reconnaissance systems, Sami said.

"Hanwha will also work closely with South Korean and Saudi Arabian governments and local companies for the transfer of technology and co-development projects whenever the opportunity arises," said Sungsoo Lee, chief executive of Hanwha Defense.

Sami is planning multibillion-dollar investments in 25 to 30 joint ventures over the next few years to build competencies in shipyards, aircraft assembly lines and other infrastructure, Mr Schwer told The National in February. The Saudi company has set a target of reaching overall sales of $10 billion (Dh36.73) by 2025.

Last month, Sami and French aerospace company Figeac Aero said they are forming a joint venture to build military and commercial metallic plane parts in the kingdom.

The Saudi company operates four major business divisions, including aeronautics, land systems, weapons and missiles and defence electronics. It is expected to create 40,000 direct jobs and provide indirect roles to more than 150,000 people in the kingdom by 2030. The company plays an important role in boosting employment, a key pillar of Saudi Arabia's economic overhaul agenda.

Neighbouring UAE is also developing its defence manufacturing capabilities with the ambition to export products to regional allies, as it seeks to diversify its economy and create jobs for nationals.