South African defense company Paramount Group plans to set up an arms production plant in Saudi Arabia

South Africa’s Paramount Group is discussing with Saudi Arabia authorities’ on plans to set up arms production facilities in the desert country.

“We are in negotiations with various governments in the Middle East, including Saudi Arabia, with a view to transferring technology and establishing production in those countries,” Paramount Group Chairman Ivor Ichikowitz told Reuters on Monday at a conference in Abu Dhabi.

In 2017, Saudi Arabia replaced Russia in third place spending $69.4bn on military equipment. It has been fighting a costly battle in Yemen since 2015 in support of the internationally recognized government against the armed Houthi movement.

The Kingdom has been looking for international partners to help improve its production capabilities with the goal of manufacturing half of its required military equipment domestically by 2030.

The chairman, however, declined to reveal the details of what was discussed to be manufactured in Saudi Arabia, but noted the defense company intends to concentrate its operations over the next couple of years in the Middle East country.

“We see the Middle East as an important growth market for us. We are also pursuing several campaigns to sell vehicles and aircraft to Middle East countries,” Ichikowitz said.

The company that manufactures military vehicles, aircraft, ships, and weapons systems also plans to secure contracts with governments in Africa, which was a big market for Soviet weapons and technology during the Cold War era.

“We have contracts with four or five governments in Africa to modernize Soviet-era equipment,” said Ichikowitz. “It’s substantial and has the potential to grow even more.”

Paramount is looking to upgrade and prolong the life of Soviet-built equipment including helicopters and fixed-wing aircraft, Reuters reported.