17 December 2013 by Guy Martin - defenceWeb
South African defence and aerospace conglomerate Denel says it is well on the way to business sustainability and has highlighted a number of important achievements for 2013, such as the awarding of the Badger production contract, the performance of the Rooivalk in African peacekeeping operations and a R5 billion guided munition contract.
Riaz Saloojee, Denel Group CEO, said that the company’s performance over the last year “has received widespread recognition. At our recent meeting with the Portfolio Committee on Public Enterprises, Members of Parliament spoke with great appreciation about the company’s role in meeting its strategic mandates and the success of our financial turnaround.”
Over the last year Denel improved revenue by more than 10% and grew profit by R30 million to R71 million. The only remaining loss-making unit in the group, Denel Aerostructures, has improved its position by 35%.
Saloojee said some of the year’s greatest highlights include the launch of the Badger, the South African Army’s new infantry combat vehicle, and the first successful deployment of the Rooivalk in active service in support of peacekeeping operations in the Democratic Republic of Congo. Some 2 000 jobs are expected to be created from the Badger vehicle, 238 of which will be delivered to the South African Army over the next decade.
Denel Land Systems is also involved in a smaller project (part of Project Warrior), which involves upgrading the SA National Defence Force’s R4 assault rifles with Picatinny rails, sights and other accessories.
Another highlight was the move into space science, with Denel creating the Spaceteq division. This was inducted as a member of the International Astronautical Federation (IAF) in September. In July 2013, satellite manufacturer SunSpace was incorporated into Denel Dynamics, creating Spaceteq. Denel said that developments are already underway for Spaceteq’s first project, a multispectral, high resolution, earth observation satellite called EO-Sat1 for operation by the SA National Space Agency (SANSA) by 2017.
“We made huge progress with our strategic alliances on missile and guided munition developments with international partners. We signed new agreements for work packages in the aerostructure business and launched an international centre of excellence for MRO work during South Africa’s historic hosting of the BRICS Summit,” Saloojee said of 2013.
Expanding on the guided munitions developments, Tawazun Dynamics, a joint venture between Denel and Tawazun Holdings, was awarded a R5 billion contract by the UAE armed forces for Al Tariq precision guided bombs for its Mirage 2000-9 fighters in November.
Also on the guided munition front, Denel successfully tested its land-based Umkhonto surface-to-air-missile, destroying targets at 20 kilometre ranges during a series of tests in the southern Cape. The Umkhonto SAM system was developed by Denel Dynamics for the SA Navy’s Meko A200 class frigates, and is in service in both Block 1 and Block 2 versions. This ground-based launcher now provides an alternative that can also be used by the SA Army’s for Phase 2 of its Ground-based Air Defence System (GBADS), according to Denel.
On the missile front, Denel Dynamics is working towards final development and qualification of the A-Darter fifth generation air-to-air missile, being developed together with Brazil. The company is also working on the future Marlin missile project, aimed at establishing a common platform for long-range all weather air-to-air and surface-to-air defence.
On the aviation side, Denel Aviation is working on external fuel tanks for the Rooivalk combat helicopter. Denel said that the project was revived about four years ago when most of the Rooivalk development was completed. The external fuel tanks are needed for the Air Force’s long range escort missions where one or two Rooivalks fly alongside other aircraft such as the Oryx to provide protection. The external tanks of fuel add about two additional hours of flying. The manufacture of production tanks for the Rooivalk squadron is expected to be contracted within this financial year as almost all testing has already been done.
Also on the aviation side, Denel this year redelivered two Botswana Defence Force AS350B helicopters after their 12 year inspection and is working on upgrading six SA Air Force C-130 Hercules with auxiliary power units and environmental control systems. Denel Aviation also handed over a Puma helicopter to the Kenyan Air Force after maintenance work.
Denel Aviation earlier this year partnered with Russian Helicopters to provide a local maintenance, repair and overhaul (MRO) facility for Russian Helicopters manufactured rotorcraft. Mi-8/17 aircraft are being catered for, but other models may be serviced at a later date.
On the manufacturing side, Denel Aerostructures received a third multi-million rand contract for the manufacturing of critical parts for the Airbus A400M strategic airlifter. The approximate R157 million contract (over eight years) will see Denel Aerostructures manufacture tailplane components.
Meanwhile, Denel Dynamics continues to support SANParks in the Kruger National Park by providing a Seeker UAV for anti-poaching operations. Mechem also supports anti-poaching operations by supplying dogs and handlers to track poachers.
Denel Pretoria Metal Pressings (PMP) this year commissioned and installed thirteen new CNC machines, worth R13 million, to assist with 30 x 175 mm ammunition production. The new machines will be able to make up to 500 of these rounds a day, meeting the requirements for the Badger vehicle. The requirement is to manufacture a volume of up to 100 000 rounds a year, something that can achieved with the introduction of the new CNC machines.
The development of the ammunition took place in tandem with the development of the 30 mm Cam-gun for the Badger, done by Denel Land Systems. The 8X8 Badger infantry combat vehicle will be equipped with a 30 mm cam-operated cannon and a breechloaded 60 mm mortar, both of which are integrated into the turret variants manufactured by DLS.
Phaladi Petje, CEO of PMP, said the commissioning of the new machines enhances PMP’s capability to export more medium calibre ammunition and to bring in valued foreign currency.
Mechem has also had a busy year, receiving contracts from Kenya and Zambia amongst others for dog training and dogs, which will sniff out explosives.
Saloojee said Denel wants to move from being a good company to a great company. “I have no doubt that we can achieve this if we continue on the current trajectory.” Part of this trajectory is Denel’s plan to grow its revenue to more than R7 billion over the next five years and create an order book more than five times its turnover. Denel is modernising its product offerings as a result, especially in the fields of artillery, unmanned aerial vehicles, ammunition and aviation MRO services.
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