Negotiations continue between the Estonian government and a company regarding the potential construction of a large-caliber ammunition factory in Põhja-Kiviõli, Ida-Viru County. Discussions began in September, with an initial expectation of reaching an agreement in the following weeks, but as of February, no deal has been finalized.
Estonia’s Ammunition Production Plans
Minister of Defense Hanno Pevkur and Minister of Economic Affairs Erkki Keldo announced in September the expectation of building the factory. However, at that time, no agreement had been signed with a potential investor. The Ministry of Defense has acknowledged that reaching agreements on large-scale projects requires time to finalize details.
The anticipated investment in the factory is estimated between €250–300 million and the project is expected to create over 100 new jobs in the region. While Estonia is pursuing this development, it declined an offer from Rheinmetall, a German company, due to the level of commitment expected from the state.
Regional Ammunition Production
Rheinmetall is proceeding with ammunition production in neighboring Latvia and Lithuania. In September, a Latvian state-owned company signed a memorandum of understanding with Rheinmetall to build a €275 million factory producing 155 mm artillery shells. Rheinmetall is also building a factory in Lithuania, focused on the production of 155 mm artillery shells.
The Ministry of Economic Affairs confirmed that discussions with potential investors are still underway. The Ministry of Defense also stated that negotiations with the large-caliber ammunition manufacturer are ongoing.
Frequently Asked Questions
What is the current status of the ammunition factory in Põhja-Kiviõli?
Negotiations between the Estonian government and a potential investor are still ongoing as of February. No agreement has been reached, and perform has not progressed beyond the negotiating stage.
Why did Estonia reject Rheinmetall’s offer?
Estonia rejected Rheinmetall’s offer because of the high level of commitments the company expected from the state.
What type of ammunition will be produced in Latvia and Lithuania?
Both Latvia and Lithuania will observe the production of 155 mm artillery shells. Latvia’s factory will produce NATO standard caliber 155 mm shells, while Lithuania’s factory will mainly produce 155 mm artillery shells.
As negotiations continue, it remains to be seen whether Estonia will reach an agreement with its current prospective investor, or if alternative options will be explored to establish large-caliber ammunition production within its borders.
