Algeria to set up US$3.7bn military vehicles factory

Rheinmetall AG Headquarters
Rheinmetall AG Headquarters in Düsseldorf, Germany

The Algeria government is set to sign a US$3.7bn (€2.7bn) contract with German defense group Rheinmetall for the construction of a vehicles factory and commencement of the production of Fuchs military vehicles, a bonus to an early signed deal worth US$13.6bn(€10bn) approved by the German government in 2011 to provide arms to Algeria.

Already groundwork has begun for the new factory where more than 900 Fuchs vehicles are to be built. Tobias Duenow, a spokesman for the German Economy Ministry confirmed that the approvals had been issued by the previous German government.

The deal is expected to see Rheinmetall’s joint venture with RMMV build Fuchs vehicles, while Daimler would sell trucks and off-road vehicles and ThyssenKrupp would build frigates for Algeria. Daimler said production of truck and bus parts in Algeria started early this year.

Germany Chancellor Angela Merkel said Algeria has played an important role in fighting extremists but the chancellor avoided commenting on the report about the Rheinmetall deal.

The military vehicles deal comes at a time when there has been concern about the risk of terrorist attacks and kidnappings in Algeria.

Headquartered in Düsseldorf, Rheinmetall AG is an automotive parts supplier and military technology group. It was the tenth-largest European defence contractor in 2011.

The Group’s automotive unit had sales of US$3.2bn (€2.369bn) in fiscal 2012 while sales of its defence arm for the same period came to US$ 3.1bn (€2.335bn). Rheinmetall AG is listed on the German MDAX and its shares are traded on all German stock exchanges.

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