Key Takeaways
- A Swedish defense firm is to establish a €300 million artillery shell factory in northeastern Estonia.
- Estonian officials confirm the project will enhance the nation’s defense capacity amid rising regional threats.
- The agreement is part of a larger drive to develop Estonia’s defense industry, spurred by the ongoing war in Ukraine.
Major Investment in Estonian Defense Industry
Estonia is set to strengthen its defense industry with a significant investment from a Swedish manufacturer that will establish a 155-millimeter artillery shell factory in the Põhja-Kiviõli defense industry park. Estonian Defense Minister Hanno Pevkur announced last week that an agreement has been reached, with the investor committing at least €300 million ($346 million) to the construction of this major facility.
The new factory will be capable of producing short-, medium-, and long-range munitions, a key component in bolstering Estonia’s defense capabilities. Estonia’s public broadcaster, ERR, has hinted that BAE Systems’ subsidiary Bofors, a well-known Swedish artillery and ammunition producer, is likely the manufacturer involved. Bofors has a historical presence in the defense sector but was divided around the year 2000. While the artillery segment became part of BAE Systems, the missile section was acquired by Saab.
A spokesperson for BAE Systems, Matthew Knowles, declined to confirm the company’s role in the project, emphasizing Estonia’s importance as a partner and advising inquiries be directed to the government. Pevkur mentioned that the company involved has requested confidentiality until contracts are formally finalized, expected in mid-April. He also clarified that the manufacturer is neither South Korea’s Hanwha Aerospace nor American defense giant Lockheed Martin.
This factory is one facet of a larger initiative to enhance Estonia’s defense capabilities amid the backdrop of Russia’s ongoing war in Ukraine, which has highlighted vulnerabilities in reliance on a limited number of ammunition producers. The Estonian government is expanding its domestic defense industry, with another site, the Ermistu defense industry park in Pärnumaa, already slated to host four companies, including U.K.-based Odin Defence and local firm Nitrotol, which is expected to commence production by 2027.
Additionally, Estonia aims to boost its production of RDX explosives through a state-owned enterprise, Hexest AS, with operations anticipated to begin by 2028. This comprehensive strategy is part of Estonia’s resolve to enhance its sovereign production capacity, aligning with its status as one of the NATO countries with the highest defense spending relative to GDP. Such initiatives signal Estonia’s commitment to safeguarding its national security and responding to emerging regional threats.
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