SAO PAULO, Sept. 27 (UPI) -- Brazil's submarine development and construction project is filtering down to local manufacturers who hope to capitalize on the program's growing appetite for local expertise and component production.
The Brazilian defense market is valued at $38.27 billion this year, said ReportLinker's study, "The Brazilian Defense Industry: Market Opportunities and Entry Strategies, Analyses and Forecasts to 2017."
The report predicts Brazil will spend at least $2.87 billion on the procurement of military hardware and software, training, pension payments, maintenance, repair and overhaul.
The submarine project is a key element, compared only with the Brazilian air force's FX-2 jet fighter acquisition program. The FX-2 program hasn't moved forward while the government of President Dilma Rousseff weighs defense expenditure originally set out by former President Luiz Inacio Lula da Silva.
Last month Rousseff unveiled plans to create a state-owned company to oversee production of the country's first nuclear submarine.
The Blue Amazon Defense Technologies or Amazul will be in charge of "promoting, developing, absorbing, transferring and maintaining" technologies needed for Brazil's nuclear program and nuclear power-related activities of the Brazilian navy, officials said.
Amazul will oversee the construction of Brazil's first nuclear-powered submarine, under way in Itaguai, Rio de Janeiro state.
Rousseff indicated Amazul's brief will be wider and will include creation of new businesses in Brazil's nuclear sector, likely to be concentrated around Sao Paolo, Brazil's largest city.
Amazul will have its headquarters in Sao Paolo.
In 2008, Brazil and France signed an agreement to build four diesel-electric submarines also known as SSK, and provide assistance in developing and fielding the non-nuclear parts of the one planned nuclear fast attack submarine.
Key specifics, such as the presence or absence of SSK air independent propulsion technologies, have yet to be made public, but the terms of the agreement leave the possibility open, Defense Industry Daily said on its website. Reports regarding the submarine deal's value have varied but are likely to exceed $5 billion.
Financing now appears to be in place, and recent releases explain the budgets, the timing and some of the key players in Brazil's Prosub program.
Least reported is the effect of the program on Brazilian defense industries big and small. The rise of Embraer as a major aviation and defense player has already spawned a series of small- to medium-scale defense industries catering for the rising demand for components.
Foreign defense manufacturers, drawn to competitive Brazilian prices, have been looking closely at the mushrooming components and parts industries. Brazilian parts manufacturers have been at pains to market their inventories are being more reliable than counterfeit Chinese spares known to be flooding the market.