Munitions factory to boost UAE rank in defence market

Abu Dhabi: A mega-million dollar expansion of an Abu Dhabi munitions factory will place the UAE at the forefront of a Middle East military defence market set to cross the $100 billion (Dh367 billion) mark in a few years, says a top defence analyst.

John Siddharth, Industry Analyst, Aerospace and Defence Practice, South Asia and Middle East for Frost and Sullivan, weighed in on yesterday's announcement that the UAE's first munitions factory, Burkan Munitions Systems, will receive $272 million in financing from First Gulf Bank. The cash injection into the UAE's military modernisation plan will help the country's air and naval branches become self reliant as well as create revenue and new jobs, Siddharth told Gulf News.

"The total defence budget of Middle East is expected to surpass $100 Billion by 2015, this implies there would be imports. The defence companies could look at private financing to cater to specific demands within the region," Siddharth said. "The other long term advantage is that the company could look at exports within the region. This is expected to not only bring in revenue into UAE but also create jobs in UAE and boost the economy."

The factory expansion may also reduce dependence on foreign supplies of munitions, he said.

"It is definitely a strategic move from UAE so that the dependency for ammunition from Western countries would decrease. It cannot be reused so by manufacturing the ammunition locally, the government could divert the funds for other purposes like alternate defence purchases or infrastructure development," Siddharth said.

Production lines

The new credit facility from First Gulf Bank is earmarked to expand production lines at Burkan Munitions Systems in Abu Dhabi and upgrade its testing facilities.

According to WAM, "the factory, the first of its kind in the UAE and the GCC region, will manufacture and test various types of ammunitions, including aircraft bombs, rockets, tank artillery, mortars, and infantry and naval forces ammunition." The Burkan Munitions Systems factory was announced in November 2007 as a new venture between Tawazun Holding LLC, established by the Offset Programme Bureau in Abu Dhabi, and Al Jaber Trading Establishment and Rheinmetall Munitions Systems.

Tawazun Holding CEO Saif Mohammad Al Hajiri said the munitions factory expansion will go a long way to "establishing a national industry serving the needs of UAE armed forces instead of relying on foreign imports."

Burkan Munitions factory now serves the local market but will extend its market reach throughout the Gulf, company officials said.

Saeed Bin Khadim Al Mansouri, General Manager and CEO of Burkan Munitions Systems, said in a statement: "The company seeks to meet the needs of the armed forces and the GCC countries and it is continuing its efforts to acquire modern technology."

Tawazun Holding announced in November 2007 that it acquired Caracal International, UAE's first small arms manufacturer.

Last year, Caracal made its first shipment of 5,000 nine-millimetre handguns to Knoxville, Tennessee.

In the United States, more than a year after Caracal received an export licence from the US Bureau of Alcohol, Tobacco and Firearms (ATF).

The US shipment was estimated to be worth around $3 million.