Volume 3, Number 2


An evaluation of the BAE/SAAB South African Royal Manufacturing Project in Virginia, Free State Province: a case study of the implementation of the South African Defence offsets
Brookes, M., Haines, R. and Wellmann, G.

This article reports on the findings of an ex-post evaluation of the South African Royal Manufacturers (SARM), an ‘offset’ which forms part of BAE Systems/SAAB consortium’s National Industrial Participation Programme (NIPP) obligations resulting from their participation in South Africa’s 1998 Strategic Procurement Programme (popularly referred to as the ‘arms deal’).

SARM was a gold chain manufacturing plant, located in the Free State mining town of Virginia and funded by loans from the BAE Systems/SAAB consortium, the South African state-owned Industrial Development Corporation (IDC) and Harmony Gold Company. The factory was founded to answer to the need of offsets, gold beneficiation and corporate social obligations. The business failed after amidst allegations of theft of gold and the sudden lay-off of approximately 500 poor black rural women. The company’s liquidation appears to be on the backburner indefinitely.

The evaluation investigates what went wrong with SARM; exploring this question both in the context of the National Industrial Participation Programme and the push for beneficiation of South African mined metals; and how the lessons learned from SARM can be utilised in the future.

Keywords: Consortium; Offsets; Gold Beneficiation; Social Obligations.