I missed this story earlier, but the government is currently in talks with Saab AB to partner Denel, the ailing parastatal.

Unlike the unsuccessful previous discussions with BAE Systems, which wanted to acquire a 30% stake in the firm, it appears that these talks are aimed instead at a far more limited partership, involving certain product areas only. This is unsurprising, Denel posted a huge loss of R1.6 billion for the last year, and most of its factories are running at less than 20% capacity. Even with massive cash injections from government and a radical restructuring being imposed under the new CEO, Denel’s future is far from assured.

Yet if Denel does manage to turn its fortunes around, a partnership with Saab would be exceedingly valuable in granting it access to otherwise reticent markets, in much the same way that Land Systems OMC’s partnership with GDLS resulted in the US Army’s purchase of the company’s mine-resistant armoured vehicles.

There’s still no word on exactly which product areas are being mooted for partnership with Saab, but a restructured Denel would likely focus most on UAVs, missiles and smart bombs, artillery and the Rooivalk. Presumably these would be the main target for any partnership with Saab too.

As for Saab itself, it has been fairly active in the South African defence industry of late. In a fairly short period of time, it has purchased majority control in three major avionics and electronic warfare firms, Avitronics, Grintek and now Aerospace Monitoring and Systems (AMS). This means that all but two (Denel and ATE) of South Africa’s major defence industry firms are now owned by foreign companies, and as a result are experiencing a serious increase both in investment and in orders. It certainly does seem that, as planned, the Arms Deal is revitalising SA’s defence industry.