Rheinmetall’s munitions division has announced that it has purchased a majority stake, worth 51%, in a South African specialist in plant engineering and chemical applications named Resonant Holdings.
As part of the agreement, the company will be renamed ‘Rheinmetall Resonant South Africa’, and the current owners will retain the remaining 49% stake in the business.
Both parties have not agreed to disclose the purchase price, while the transaction and the name are subject to customary regulatory approvals. Nevertheless, it is anticipated that this new joint venture will accrue an annual sales potential of more than €100m ($109.6m).
The major shareholder, Rheinmetall Waffe Munitions (RWM) GmbH, established in 2004, specialises in the development of large-calibre weapon systems including corresponding ammunition. These include the Leopard 2 main battle tank and the SMArt 155 search-and-fuse ammunition for artillery.
Global ammunition sector
The strategic decision to acquire a stake in Resonant was made in response to the global military demand for munitions and longer-term investment in corresponding indigenous production sites – such as the Lynx Infantry Fighting Vehicle production facilities in Hungary and Ukraine.
“Rheinmetall is therefore significantly expanding its existing capabilities in ammunition production by vertically integrating further competences, thus positioning itself even more robustly for the independent planning, construction and operation of production facilities for the manufacture of chemical products such as propellant powder and explosives,” RMW explained in a statement on 8 August 2024.
The global military ammunition market is anticipated to register a compound annual growth rate (CAGR) of 5.1%, growing from $22bn in 2023 to $36bn by 2033. The cumulative market for global expenditure on military ammunition is valued at $313.4bn over the forecast period, according to GlobalData.
The intelligence consultancy adds that the large calibre ammunition segment is expected to dominate, which accounts for 35% of the market, followed by small calibre ammunition with a 21.9% share.
Europe in a pre-war mentality
Ammunition production supply chains are reforming in a period that has been described, at least in Europe, as a state of ‘pre-war’.
Defence budgets are growing, mostly in Eastern and Central Europe, where the threat perception of Russia looms largest over the continent.
GlobalData also accounted for the European artillery systems market to expand: it was valued at $3.9bn in 2023 and is projected to grow at a CAGR of 4.4% to reach $6bn by 2033. The region is expected to cumulatively spend $56.2bn on artillery systems over the forecast period.
