The Brazilian subsidiary of Italian vehicle manufacturer Iveco is to begin production of Guarani armored vehicles for Brazil's military forces.

Under the $118.6 million contract from the Brazilian Ministry of Defense, 86 VBTP MR wheeled armored personnel carriers will be produced.

Their production will allow the Brazilian army to restructure its mechanized forces and also set in motion an Iveco production process that could produce more than 2,000 Guaranis for the country.

The VBTP MR can carry nine soldiers in addition to a two-man crew. It can be transported on C-130 aircraft, is fully amphibious and is equipped with a remote weapons system.

It is of modular design, which allows the use of different turrets, weapons, sensors and communications systems.

The Brazilian government has authorized procurement of about 2,000 of the vehicles. The initial batch of 86 will be used by infantry and cavalry units of the land force, which will carry out operational trials of the product.

Iveco Latin America Marco Mazzu, speaking at the contract signing, called the deal the "renaissance" of Brazil's defense industry.

The Gurani was developed with Brazilian technology through a joint project between the Army Technology Center and Iveco, which is part of the Fiat Industrial Group and will replace the military's fleet of Urutu and Cascavel wheeled armored vehicles which date to the 1970s.

Iveco said the vehicle has sparked interest in other countries of the region and preliminary talks have been conducted with Argentina on acquiring the Guarani.

Iveco said production of the initial order should begin early next year at a dedicated facility in the Brazilian state of Mato Grosso. More than 100 direct suppliers and some 600 indirect suppliers will be involved at the full-production level.

In other developments, BAE Systems in Britain reports that the first of three ocean patrol vessels ordered by the Brazilian navy has been built and is sailing to its homeport.

Prior to its sailing, the Amazonas' crew, supported by a team from BAE Systems, underwent extensive training on the vessel, including anti-piracy drills.

"Saying farewell to the first ship in the Amazonas class is a significant stage in our ongoing relationship with the Brazilian navy and is a source of great pride to those who worked on her," said Nigel Stewart, commercial director of BAE Systems Maritime. "We look forward to continuing our work with the Brazilian Navy to deliver the next two Ocean Patrol Vessels, Apa and Araguari, over the coming months."

The Amazonas will complete a series of diplomatic visits in Europe and Africa before arriving in Rio de Janeiro in October, following which its crew will undergo an operational assessment before joining the Brazilian fleet.

The Brazilian navy will use the vessel for maritime security, search and rescue and humanitarian relief operations.

The first-of-class Amazonas was constructed at BAE Systems' Portsmouth facility. The Apa and Araguari will be delivered to the Brazilian navy in December of this year and in April 2013, respectively.

Vessel features include 30mm cannon and 25mm guns, inflatable boats and a helicopter flight deck.