Yahoo Finance German company in frame for £750m British Army tank contract
Britain’s fleet of Challenger II battle tanks will get a £750m upgrade overseen by German company Rheinmetall, The Telegraph understands.
The industrial giant indicated a contract had been agreed with the Ministry of Defence as it updated the market on its financial performance on Thursday.
About 150 of the British Army’s 227 Challenger tanks will get a new turret and gun capable of firing advanced types of ammunition, along with better targeting and computerised systems.
The future of the armoured vehicles has been subject to intense speculation.
Last summer a major row blew up after leaks to the media that the Army’s tanks could be axed in the forthcoming integrated defence review.
The actual review, issued on Tuesday, signalled the Challenger would stay, but the fleet size would be reduced.
Work to upgrade the tanks will be carried out by RBSL, a joint venture between Rheinmetall and BAE Systems, after the UK defence giant sold a 55pc stake in its land systems division to the German business for £30m two years ago .
It is unclear how much of the upgrade will be carried out in the UK.
Rheinmetall sought to play down the deal after chief executive Armin Papperger told analysts it was confident it had won the contract at a results briefing.
Other industry sources said they understood it was a done deal.
One analyst who attended the briefing asked for clarity on whether the deal was inked, something which the company would have to disclose under Germany’s financial rules, and was assured it was certain.
A spokesman for Rheinmetall said: "Mr Papperger said Rheinmetall was confident that RBSL would be signing the Challenger II life extension programme contract in the near future. RBSL is still in talks with the UK MOD and looks forward to a positive outcome of the negotiations."
The MoD is due to issue a "Defence Command" paper on Monday which details how it will act on the strategy laid out in the integrated review, and is expected to detail plans to expand, update or cut parts of the UK’s arsenal.
An announcement on the Challenger II deal would be likely to be included in the paper.
An MoD spokesman said: "Work on the Challenger II upgrade project continues and announcements on its progress will be made in due course."
Defence analyst Francis Tusa said: "RBSL doing the upgrade has been the only game in town since the summer, despite bids from others including completely new Leopard tanks from Germany's KMW, which said it would put a plant in Britain to build them.
"Even if the MoD won't say so, there is undoubtedly a contract in place, they just wanted to announce it on their own terms."
