Ammunition Production: EU Allocates €513 Million to Address Critical Shortages

The European Union has allocated over €513 million to enhance ammunition production capacity of EU ammunition firms, with the aim of increasing the bloc’s annual output of shells to two million by 2025.

This funding is intended to assist munition firms across the EU in upgrading their facilities to expedite shell production, thereby addressing concerns about inadequate supply to Ukraine amidst Russia’s invasion.

Acknowledging complaints from Kyiv regarding its inability to contend with Russia’s sustained shelling, the EU acknowledged in January its failure to fulfill a pledge made the previous March to supply a million shells within a year.

By March 2024, member states had delivered only 524,000 shells, representing 52% of the promised quantity, according to EU foreign affairs chief Josep Borrell.

These shells were provided through the initial two phases of the EU’s ASAP plan, which entails utilising two billion euros to acquire existing European inventories and facilitate new joint purchases from EU manufacturers.

The third phase of ASAP, unveiled on Friday, involves the disbursement of €513 million to aid firms in improving their facilities, along with co-financing investments with the private sector, resulting in a total investment of €1.4 billion, as stated by the European Commission.

The European Commission identified 31 investment projects covering explosives, powder, shells, missiles, and testing and reconditioning certification.

However, it emphasised that the production of explosives and powder will receive the bulk of the funding, amounting to €124 million and €248 million, respectively.

By alleviating supply bottlenecks, the Commission aims to boost annual explosive production in the EU by over 4,300 tons and powder production by 10,000 tons.

Firms that received funding to augment explosives production include Greece’s Hellenic Defence Systems, Slovakia’s MSM Export, Norway’s Chemring Nobel, France’s Eurenco France, Sweden’s Eurenco Bofors, and Hungary’s N7 Holding.

Among the 17 firms funded to enhance powder production are Rheinmetall, Nexter, Nammo, and Eurenco. Deal signings for funding are scheduled for May, according to the Commission.

The member states participating in the scheme encompass Greece, Slovakia, Norway, France, Sweden, Germany, Italy, Hungary, Latvia, Finland, Spain, Romania, Belgium, and Czechia.

While a spokesperson for the Aerospace, Security and Defence Industries Association of Europe (ASD) welcomed the initiative, they raised concerns that the EU was augmenting the funding with €260 million drawn from the budget of the European Defence Fund, which is tasked with financing defense technology within the bloc.

The spokesperson commented, “ASAP has been an important step to support the much-needed ramp-up of the European defense industry’s production capacity.”

However, they expressed regret regarding the financial envelope’s limitations and sources. The use of €260 million from the European Defence Fund to fund ASAP was particularly disappointing, as it could potentially undermine the long-term development of the European defence industry.

They emphasised the necessity for Europe to address urgent needs, such as ammunition production, without compromising research and development activities crucial for maintaining Europe’s technological edge in defence in the long term.

Main Image: https://csgdefence.cz/artillery-ammunition

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Read also: Defence Spending: Europe Needs €56 Billion to Bridge NATO Funding Gap, Reports FT

According to a study by the German Ifo Institute, countries in the EU such as Italy, Spain, and Belgium are struggling to meet NATO’s defence spending target of 2% of GDP, while also grappling with high levels of public debt and budget deficits.

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