Saudi Arabia and Spanish shipbuilder Navantia sign €900m naval deal

The deal builds on a February announcement to jointly manufacture five Avante 2200 corvettes

Sami-Navantia joint venture signed a €900m contract with the Spanish shipbuilder Navantia. Courtesty Sami.

State-owned Saudi Arabian Military Industries (Sami) and Spain's Navantia signed a €900 million (Dh3.64 billion) contract for the Spanish shipbuilder to adapt its Avante 2200 corvette to the requirements of the Saudi Arabia's naval forces.

The joint venture is expected to help the kingdom localise its technology capabilities by up to 60 per cent and benefit other local organisations, Sami said in a statement on Wednesday.

The contract "creates an excellent opportunity to capitalise on our strategic partner’s extensive experience in the design, construction and integration of warships to build our own capabilities in the domain", said Antonio Rodriguez-Barberan, chief executive of Sami-Navantia.

The contract follows up on a February 2018 announcement to form a joint venture that will integrate and adapt Navantia's combat management systems for the Saudi navy. Sami and Navantia agreed to design and build five Avante 2200 warships in a programme that would begin this fall and deliver the last ship by 2022.

Saudi Arabia is developing its manufacturing industry to diversify its economy away from hydrocarbons, the sale of which accounts for the majority of its revenues. The country's sovereign wealth fund, the Public Investment Fund, created Sami in 2017, which is part of the Vision 2030 plan for economic overhaul. Sami is mandated to localise more than half of the kingdom's total military spending, up from about 2 per cent.

In addition to the combat system integration outlined in the new deal, the agreement between the JV company and Navantia will focus on system engineering, hardware design, software ‎development, testing and verification, prototyping, simulation and modeling, as well as logistical support and training programmes.

Training and technology transfer are key components of the partnerships Sami is building with international companies as part of a plan to boost the participation of young Saudi nationals in the defence industry.

Sami has already signed a series of joint ventures and partnerships with companies from South Africa and France this year to bring international expertise and knowledge to the its defence manufacturing sector.