Project will produce 155 mm artillery shells by 2027 for NATO and EU states, bolstering Eastern Europe’s industrial capacity.
German defence group Rheinmetall and Bulgarian state-owned VMZ (Vazovski Mashinostroitelni Zavodi) have formed a €1 billion joint venture to build an artillery shell production facility in Sopot, Bulgaria, expanding Europe’s ammunition manufacturing capacity.
The deal comes amid a Europe-wide push to expand munitions production in response to supply chain vulnerabilities and stockpile depletions caused by the war in Ukraine.
Rheinmetall will hold 51% of the JV, with VMZ owning the remaining 49%.
The venture will strengthen Eastern Europe’s defence industrial capacity. It follows recent proposals by Bulgaria’s Economy Ministry to allocate up to €960 million in EU SAFE (Security Action for Europe) mechanism funding to modernise VMZ’s operations. SAFE funding offers EU member states competitively priced, long-term loans for large-scale procurement projects.
Once operational, the JV is expected to become a major hub in European artillery ammunition production, reducing reliance on external suppliers and supporting NATO’s long-term replenishment needs.
Annual production at the 100-hectare site is projected at 100,000 shells, plus propellant charges for up to 150,000 rounds and around 1,300 tonnes of propellant powder (gunpowder). Projectile casing production will begin in 2027, with energetic materials (propellant) following in 2028. The deal is expected to create 1,000 jobs.
Armin Papperger, CEO of Rheinmetall AG, said: “With the new production facility, we are further expanding our leading role as a manufacturer of artillery ammunition to continue supporting the defence capabilities of the European Union and NATO.”
Rheinmetall has been a major beneficiary of Europe’s rearmament push since the outbreak of the war in Ukraine, with its share price tripling this year alone. This deal is the latest in a series of global expansion and partnership announcements by the German industrial group, following September’s announcement that it will acquire fellow German naval defence group and warship manufacturer NVL.
Deal summary
| Parties | Rheinmetall; VMZ |
| Deal size | EUR 1 billion |
| Category | M&A |