Europe’s Munitions Boom: A Decade of Industrial Expansion
Global defence markets are experiencing one of the most significant conventional rearmament cycles in decades. This week’s developments focus on how the munitions, explosives, and heavy vehicle segments are driving industrial expansion across Europe, underpinned by long-term investment and cross-border partnerships.
From Leonardo and Rheinmetall’s new armoured vehicle collaboration to Rheinmetall’s artillery plant in Lithuania and NAMMO’s production surge, Europe’s defence supply chain is retooling for sustained high-volume output.
Visiongain Top Takeaways
- European ammunition and explosives markets enter a decade-long bull cycle.
- Rheinmetall expands pan-European artillery and propellant capacity.
- Leonardo-Rheinmetall joint venture advances Italian Army modernisation.
- NAMMO scales production and partners with Ukraine for local manufacturing.
- Supply chain investment deepens NATO’s industrial resilience.
Leonardo and Rheinmetall Launch A2CS Programme Deliveries
Reflecting the growing momentum behind trans-European defence industrial integration, Leonardo Rheinmetall Military Vehicles (LRMV), a 50:50 joint venture between Leonardo and Rheinmetall AG, has secured its first supply contract for 21 A2CS Combat vehicles for the Italian Army. The award marks a significant milestone in Italy’s ground modernisation strategy and underscores the growing role of industrial partnerships in Europe’s rearmament cycle.
Laurent Sissmann, CEO of LRMV, commented:
“We are pleased to announce this first step of the industrial synergy between Leonardo and Rheinmetall. We will work side by side to provide cutting-edge armoured vehicles, able to operate in modern operational scenarios.”
The contract covers five Rheinmetall Lynx KF-41s equipped with the Lance turret, followed by 16 newly configured vehicles using the same chassis but fitted with Leonardo’s Hitfist 30mm turret. The agreement also provides for the retrofit of the initial vehicles to the Hitfist configuration. This is alongside an option for 30 additional platforms and advanced training and simulation systems to enhance crew readiness.
These digitalised next-generation platforms combine the best technologies from both companies and are designed for interoperability in multi-domain operations. The programme falls under Italy’s A2CS – Army Armoured Combat System (formerly AICS – Armoured Infantry Combat System), which includes the acquisition of 1,050 armoured combat vehicles alongside the new Main Battle Tank programme to renew the Italian Army’s heavy fleet.
Visiongain Insight: The Leonardo-Rheinmetall partnership exemplifies Europe’s accelerating consolidation of industrial capabilities. By combining Italian systems integration with German platform engineering, the A2CS programme provides a blueprint for next-generation European collaboration. Its emphasis on digitalisation, lifecycle support, and modular training systems illustrates how procurement models are evolving from platform delivery to continuous capability management.
Rheinmetall Breaks Ground on Lithuania Ammunition Plant
Rheinmetall has broken ground on a new 155mm artillery ammunition plant in Baisogala, Lithuania, operated by the joint venture Rheinmetall Defence Lietuva, UAB, a partnership between Rheinmetall AG and Lithuanian state-owned group EPSO-G. The investment strengthens Europe’s sovereign ammunition production base and enhances NATO’s industrial resilience.
The groundbreaking ceremony on 4 November 2025 brought together senior representatives from both governments and industry. Attendees included President Gitanas Nausėda, Prime Minister Inga Ruginienė, Minister of Economy and Innovation Edvinas Grikšas, Minister of Energy Žygimantas Vaičiūnas, EPSO-G Managing Director Mindaugas Keizeris, and Rheinmetall CEO Armin Papperger. Also present were Minister of Finance Kristupas Vaitiekūnas, Minister of Interior Vladislav Kondratovič, Giraitės Ginkluotės Gamykla (GGG) CEO Mindaugas Kurauskas, and Invest Lithuania General Manager Elijus Čivilis.
Dr Nils Schmid, German State Secretary in the Federal Ministry of Defence, attended the event, underscoring the close industrial and political partnership between Lithuania and Germany.
President Gitanas Nausėda described the project as:
“a milestone in Lithuania’s integration into the European defence industrial base and a symbol of strategic trust between Vilnius and Berlin.”
The €300 million facility will span approximately 340 hectares and include a shell-casing forge and filling plant. Production capacity is expected to reach several tens of thousands of 155 mm projectiles annually, creating around 150 jobs. Operations are planned to start in 2026, with line qualification running through year-end and a phased ramp-up from 2027.
During the ceremony, Rheinmetall and Lithuania’s Ministry of Economy and Innovation also signed a Memorandum of Understanding to establish a Centre of Excellence for Propellants in the country. The facility will produce energetic components, combustible cartridge cases, and modular propellant charges, with an annual capacity in the several hundred thousand range. The addition of propellant manufacturing is viewed as a critical capability for full-cycle ammunition independence.
Armin Papperger, CEO of Rheinmetall AG, stated:
“The new plant in Lithuania will be of strategic importance not only for Lithuania itself, but also for Europe and NATO.”
Rheinmetall confirmed plans to develop an additional artillery production site in Latvia, expanding its Baltic network and embedding the region into NATO’s long-term munitions supply chain.
The project forms part of Rheinmetall’s broader European expansion programme designed to meet rising demand for ammunition and propellants across allied nations.
Visiongain Insight: The Lithuanian and Latvian initiatives demonstrate how Rheinmetall is turning Europe’s rearmament drive into a distributed industrial network. By embedding ammunition and propellant manufacturing in the Baltics, the company is deepening supply-chain redundancy, strengthening NATO’s deterrence posture, and positioning itself at the heart of Europe’s defence industrial transformation.
Nammo Expands Ammunition Capacity and Ukraine Partnership
Norwegian-Finnish ammunition manufacturer Nammo is accelerating its expansion beyond its traditional Raufoss base, signalling the strength and longevity of Europe’s current munitions upcycle. Jointly owned by the Norwegian state and Finland’s Patria Oyj, Nammo exemplifies the Nordic model of dual-use defence innovation and cross-border industrial cooperation.
The company is assessing additional production sites within Norway, with expansion viewed as a question of location rather than necessity. The workforce has doubled from 2,100 employees across nine countries four years ago to 4,000 today, and is expected to reach 7,000 by 2029.
Announcing the expansion, CEO Morten Brandtzæg noted the scale of the effort:
“It’s busy, to put it mildly. We are now building new factories, while at the same time training new employees.”
The announcement came just one day after Nammo signed a Letter of Intent with a Ukrainian industrial partner, underscoring the company’s parallel drive to scale both domestically and abroad. The agreement outlines two key objectives:
- Establishing a joint venture for the production, development, and sales of ammunition within Ukraine.
- Strengthening cooperation to make Ukraine self-sufficient across the ammunition value chain.
These developments further highlight Europe’s strategic shift toward distributed and sovereign ammunition production.
Visiongain Insight: Nammo’s expansion highlights how Europe’s second-tier defence manufacturers are scaling rapidly to fill critical supply gaps left by legacy primes. Its partnership in Ukraine marks the next phase of industrial integration, where Ukraine shifts from aid recipient to sovereign co-producer within NATO’s munitions ecosystem. The move blends strategic solidarity with industrial pragmatism, reflecting the new equilibrium between resilience and rapid scalability in Europe’s defence economy.
Market Outlook
The ammunition and explosives markets are entering a sustained expansion cycle, underpinned by structural demand rather than cyclical procurement. Infrastructure investment across Europe and NATO partners is accelerating, extending from energetic materials and propellant systems to final assembly lines and digitalised training ecosystems.
Visiongain projects that this expansion phase will extend well into the 2030s, supported by ongoing stockpiling, modernisation, and industrial resilience programmes. The result is a multi-billion-euro reindustrialisation wave reshaping defence supply chains from the Nordics to Central Europe.
Visiongain Insight: Defence procurement is shifting from episodic demand to long-term capacity planning. Governments are no longer buying ammunition solely for replenishment but are investing in the ecosystem that produces it. This marks a structural reorientation of the European defence economy from consumption to capability.
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