BRAZIL – A consortium formed by Germany’s Thyssenkrupp AG and Brazilian planemaker Embraer SA signed a deal to deliver four frigates to Brazil’s navy between 2025 and 2028.

Reuters reported that the contract signed in Rio de Janeiro is part of Brazil’s drive to modernize its navy so it can patrol offshore resources in the Atlantic, such as Brazil’s vast pre-salt oil reserves.

Although the companies did not disclose the price tag, the Brazilian navy website said the four-ship program will cost about US$2 billion.

Last year, the companies had been selected as preferred suppliers for the contract to deliver four Tamandaré class corvettes, but the original design was enlarged and the navy says they are frigates.

The ships according to Reuters, will be totally built in Brazil, at the naval shipyard of Itajaí in Santa Catarina State, with local content rates above 30% for the first vessel and 40% for the others. Thyssenkrupp will supply the technology.

“The Tamandaré Class Programme will strengthen our ties by transferring technology and generating highly qualified jobs for the country,” said Rolf Wirtz, CEO of Thyssenkrupp Marine Systems (TKMS).

Thyssenkrupp, a German conglomerate has recently offloaded its elevator and lift business unit- the most profitable in the group-  to a group led by private equity firms Advent International and Cinven.

The sale was to provide the company with enough cash flow to restructure its other business units which have been recording losses for some time now.

TKMS is Germany’s second-largest defense group after Rheinmetall.

Thyssenkrupp also has plans to spin it off and  Rheinmetall along with France’s Naval Group have been mentioned as a potential buyer of the unit in the past.