Saudi Arabian Military Industries (SAMI), a wholly-owned subsidiary of the Public Investment Fund (PIF) and the National Champion of Military Industries Localization, today signed a joint venture agreement.
The agreement is between SAMI, France’s Figeac Aero Group, and the Saudi Arabian Industrial Investments Company (Dussur) announcing the establishment of SAMI Figeac Aero Manufacturing LLC, focused on the creation of higher-precision manufacturing facilities in Saudi Arabia for the production of aerostructures components.
As per the report from SAMI, an announcement was done on Saudi-French Investment Forum held on the sidelines of the visit of the President of France Emmanuel Macron to Saudi Arabia.
An agreement was signed between Eng. Walid Abukhaled, CEO of SAMI, Jean-Claude Maillard, Chairman, and CEO of Figeac Aero, and Dr. Raed Al-Rayes, CEO of the Saudi Arabian Industrial Investment Company (Dussur).
The core focus behind this joint venture is for the development of Saudi Arabia’s aerostructural manufacturing capacity, training the Saudi engineers and technicians to operate as part of the project, and boosting localization of the military and civil aerospace industries in line with the Saudi Vision 2030.
Initial merchandise will be focusing on machining and processing of light alloy (aluminum) and hard metal (titanium) aerospace parts.
Statement from H.E. Mr. Ahmed bin Aqeel Al-Khateeb, Chairman of SAMI
Commenting regarding the announcement, he stated: “Through the establishment of this new joint venture, we at SAMI have further strengthened our commitment to supporting the development of a robust indigenous military industries sector in Saudi Arabia.”
He further added: “By creating a distinctive partnership between local companies and a leading international player, we aim to accelerate the localization of advanced technologies in the aerostructures domain. In doing so, we shall also increase investment flows and create high-quality job opportunities for Saudi youth, in line with the targets outlined in Saudi Vision 2030.”
Statement from Eng. Walid Abukhaled, CEO of SAMI
He stated: “The signing of today’s joint venture agreement marks a significant step in our drive to strengthen Saudi Arabia’s aerospace ecosystem through global strategic partnerships.”
He further added: “. Together, the three signatories will collaborate with Saudi authorities and regulators to identify opportunities for the transfer of technology and expertise to the Kingdom, enhancing the local content and creating exciting opportunities in both the commercial and military aerostructure manufacturing industries.”
Statement from Jean-Claude Maillard, Chairman and CEO of Figeac Aero
He pointed out: “In today’s circumstances, with so little visibility on the short term, finalizing this partnership will create a real opportunity for Figeac Aero. It will not only enable us to establish a commercial footprint in the Middle East but also allow us to access Saudi Arabia’s military and commercial industrial offsets markets.”
He further added: “Our shareholding in SAMI Figeac Aero Manufacturing LLC will be a minor one, but the Saudi company’s future investments will be backed by robust local and state banking partners. We will have a crucial role to play in laying the foundations of Saudi Arabia’s future aerospace industry.”
Statement from Dr. Raed Al-Rayes, CEO of Dussur
He stated: “This joint venture marks an important milestone in developing the industrial metals value chains in its highest application, aerospace. In line with Dussur’s mandate to grow strategic industries in Saudi Arabia, the joint venture will connect the Kingdom to the global aerospace OEMs’ supply chain, unlock the development of the aerospace industry in Saudi Arabia, and serve as a catalyst for future growth.”
He further added: “Further, it will enable the flow of operational know-how to the Kingdom and give rise to the localization of aerostructure components manufacturing.”
This joint venture follows the signing Memorandum of Agreement (MoA) in 2019 at the International Paris Airshow. The joint venture also successfully secured approvals from five other territories comprising the European Union.
Shares in the latest firm will be distributed between Figeac Aero, as a minority shareholder, and SAMI Dussur Aeronautics LLC, a partnership between SAMI and Dussur.
Its establishment was finalized upon the receipt of all obligatory regulatory approvals from the Saudi General Authority for Competition (GAC), which issued a No-Objection Certificate with respect to the accomplishment of the economic merger between the three firms.
Over a 10-year period, the project will encompass a series of major investments – most of which to be financed by local financial institutions – including the launch of a new production facility in Jeddah located at the site of the Aircraft Accessories and Components Company (AACC). Currently, four cutting-edge 5-axis CNC machines and supporting production equipment are being commissioned by Figeac Aero technical teams to manufacture the first products by the end of the year 2021.
Phase One involves ramping up the facility, which is scheduled to be completed by 2024 for an investment of about USD 50 million (approximately equivalent to SAR 187.5 million), including machines, infrastructure, training, and certification, and aiming to generate USD 10 million (approximately equivalent to SAR 3.75 million) revenue by the end of the year 2024.
SAMI Figeac Aero Manufacturing LLC will be equipped with fourteen state-of-the-art machining units and employ over 60 local people.
This joint venture has signed a service contract worth about USD 40 million (approximately equivalent to SAR 150 million), under which Figeac Aero will provide SAMI Figeac Aero Manufacturing LLC with a full range of industrial and technical assistance and transfer the relevant industrial know-how. Further, the three partners will collaborate with the Saudi authorities and regulators to identify and capture opportunities for localization in both the commercial and military sectors.