EU sprinkles $560 million over defense firms to grow ammunition output

EU sprinkles $560 million over defense firms to grow ammunition output

Time Stamp: March 15, 2024 10:33 AM
Source Node: 2516027

ROME — The European Union has named a host of local ammunition firms it will supply with more than half a billion euros, or almost $560 million, in combined funding to help them beef up production in a bid to push the bloc’s annual output of shells to two million a year by the end of 2025.

Munition firms across the EU are in line for the funding to invest in their facilities to accelerate shell production to improve supply to Ukraine as it battles against Russia’s invasion.

Amid complaints from Kyiv that it cannot compete with Russia’s constant shelling, the EU admitted in January that it had fallen short on a pledge made last March to supply a million shells in a year.

Instead, member states would hand over just 524,000 shells, 52% of the promised batch, by March 2024, said EU foreign affairs chief Josep Borrell.

Those shells were coming courtesy of the first two phases of the EU’s so-called ASAP plan to use two billion euros to buy up existing European inventories and make new joint purchases from EU manufacturers.

Phase three of ASAP, announced on Friday, involves the €513 million to help firms improve facilities, as well as co-finance investments with the private sector, which should take the total investment to €1.4 billion, the European Commission said in a statement.

The 31 investment projects selected cover explosives, powder, shells, missiles, and testing and reconditioning certification, the Commission said, although it added that the production of explosives and powder will receive the lion’s share of the funding – €124 million and €248 million, respectively.

As bottlenecks in supply are eased, the Commission hopes to increase the annual production of explosives in the EU by over 4,300 tons and the production of powder by 10,000 tons.

Firms who applied for and received cash to boost explosives production included 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 who applied for and received cash to boost powder production are Rheinmetall, Nexter, Nammo and Eurenco.

Deals for funding will be signed in May, the Commission said.

Overall, the member states involved in the scheme are Greece, Slovakia, Norway, France, Sweden, Germany, Italy, Hungary, Latvia, Finland, Spain, Romania, Belgium and Czechia.

A spokesman for the Aerospace, Security and Defence Industries Association of Europe (ASD), welcomed the deal but claimed the EU was bulking up the funding with money taken from the budget of the European Defense Fund – the EU body charged with funding defense technology in the bloc.

“ASAP has been an important step to support the much needed ramp-up of the European defense industry’s production capacity,” the spokesman said. But he added, “At the same time, we regret the limits and the sources of the financial envelope. Using €260 million (from the) budget of the European Defence Fund to fund ASAP is particularly disappointing in this respect, as it undermines the long-term development of the European defense industry. Europe needs to address today’s urgent needs, including ammo production, without undermining research and development activities that ensure Europe’s technological edge in defense in the long run.”

Tom Kington is the Italy correspondent for Defense News.

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