Defence

Leonardo-Rheinmetall, tank agreement ready

Advanced negotiations for an alliance on new weapons for the Italian Army. Towards orders worth 20 billion over 10 years for 280 tanks and 1,000 lighter tracked vehicles

Il Panther della Rheinmetall

3' min read

3' min read

Leonardo is in very advanced talks with the German Rheinmetall group to form an alliance in land armaments.

The pivot of the agreement under discussion is the establishment of a joint German-Italian joint venture to manage future contracts for the production of new heavy tanks (Mbt) and new armoured infantry vehicles (Aifv) for the Italian Army, which needs to renew the ageing fleet of Ariete and Dardo. This is an industrial collaboration, the JV would not have any industrial plants, but would manage the contracts with Defence, so the work would be transferred to the companies.

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Future orders

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The planned expenditure for future orders, no orders have yet been awarded, is estimated to be in the order of EUR 20 billion over more than ten years to produce 280 tanks (half combat version and half support vehicles) and more than a thousand lighter tracked vehicles (Aifv). According to authoritative sources, a preliminary agreement should be signed tomorrow between the two groups, a Memorandum of Understanding. Leonardo, when questioned, did not comment.

Rheinmetall has more advanced products than the former Finmeccanica. The Germans are developing the Panther tank and in armoured tracked vehicles they have already produced the Lynx, purchased from Hungary.

I BIG EUROPEI DELLA DIFESA

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Vehicles 'Italianised'

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In order to obtain the rich Italian order, Rheinmetall would agree to let Leonardo participate significantly in the production of these 'Italianised' vehicles, especially for the electronics and tank turrets, so there would be work for Italian industry.

The aim of the alliance is also Leonardo's entry to the international table for the realisation of the project of the future European heavy tank, called Mgcs (Main ground combat system), an initiative promoted by France and Germany, which have the strongest industries in a very fragmented sector.

For some years now, the CEO of the Duesseldorf-based giant, Armin Papperger, has been courting Leonardo to become a partner in what is one of the most important orders in Europe in land weapons, a sector that has been rediscovered - also in terms of funding - after the Russian invasion of Ukraine.

Target change

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The former Finmeccanica had made a different choice. Under the previous management of Alessandro Profumo it had bet on Knds, the Franco-German group that builds Leopard tanks through the German company Krauss-Maffei Wegmann (Kmw). After the arrival of CEO Roberto Cingolani, on 9 May 2023, together with co-general manager Lorenzo Mariani, the plan to sell a shareholding in Oto Melara to Knds was abandoned, while an alliance with this group to build Mbt tanks for the Army (an order worth around 8 billion lire) and to identify an Italian participation in the future European Mgcs was confirmed.

The negotiations to make the agreement operational broke down over an insurmountable obstacle. The Germans of Kmw did not agree to give Leonardo what was requested, i.e. work to 'Italianise' the Leopard 2A8, for half the value of the order. On 11 June, it was announced that the negotiations between Leonardo and Knds had broken down.

Plan B

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The Italian group already had a plan B ready, the replacement of the failed alliance with one with another German giant. According to authoritative sources, Rheinmetall is willing to give Leonardo space in the production of the Panther (or similar) tank, as work lots have not yet been assigned to all suppliers. And also for the Lynx, the Germans would entrust Leonardo with a significant share of the work.

The Armed Forces leadership, informed of the negotiations, supports the ongoing developments. "They are waiting for Leonardo to confirm the joint venture with Rheinmetall. In the event of an agreement for the Main battle tank the reference model would be the Panther, for the Aifv the Lynx,' the Secretary General of Defence, Luciano Portolano, told Il Sole 24 Ore on the sidelines of an event a few days ago.

After the MoU there will have to be negotiations to make the agreement operational. The first contract with Defence for tanks could be awarded by the end of the year. Barring unforeseen events.

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  • Gianni Dragoni

    Gianni DragoniCaporedattore, inviato

    Luogo: Roma

    Lingue parlate: italiano, inglese, francese

    Argomenti: economia, finanza, industria aerospazio, difesa, industria ferroviaria, trasporto aereo, grandi aziende pubbliche, privatizzazioni, bilanci società di calcio, stipendi manager, governance società quotate, conflitti d'interesse

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