LONDON, Oct. 2 (UPI) -- Rheinmetall Nitrochemie has won an exclusive deal to provide the British military with propellant systems for ammunition and powder.
The order is estimated at $291.8 million with a 10-year duration.
The Dusseldorf-based company will serve as a subcontractor to Britain's BAE systems, responsible for providing ammunition to the British armed forces as part of a major deal with the Ministry of Defense known as the Munitions Acquisition Supply Solution initiative.
Defense experts say the near $300 million deal paves the way for subcontract deals for other parts of Britain's MASS agreement.
The MASS agreement gives BAE responsibility for supplying live and practice ammunition across all calibers and types.
The 10-year supply agreement effectively puts Rheinmetall Nitrochemie at the forefront of the European propellants and powder industry. For the British armed forces, however, the deal amounts to significant cost savings as well as a secure supply of consistently high-quality ammunition.
According to Rheinmetall, MASS is responsible for about 80 percent of all British armed forces ammunition requirements, including small arms, mortars, tanks and naval artillery.
Rheinmetall Nitrochemie has worked closely with BAE Systems for eight years, supplying propellants and combustible cartridge components. In the course of that period, significant investment has been made to establish world class production capabilities in support of BAE Systems requirements, company officials were quoted saying in the British press.
The deal formalizes and extends the existing relationship between the two companies. It also introduces price caps and cost-reduction incentives.
Under the MASS agreement, reported Defense News, "Rheinmetall already has supplied ammunition and components for 20mm and 30mm weapons, as well as 105mm smoke and red phosphorous projectiles, and 155mm smoke and illumination shells."
"Other pyrotechnics and ammunition supplied to the United Kingdom by Rheinmetall under a separate agreement, known as DGM/1400, include 40mm cartridges, 30mm Goalkeeper FMPDS ammunition, and L84A2 smoke grenades," Defense News reported.
That agreement was signed in 2005 and will continue until at least March 2011.
The company produces propellants and propelling charges for various calibers of ammunition, with facilities in Aschau, Germany, and Wimmis, Switzerland. With those operations, Rheinmetall Nitrochemie is also the Propellants Division of the Dusseldorf-based Rheinmetall Defense, whose 9,000 employees generate annual sales of more than $2 billion.