Ammunition production in Denmark bolstered by new contract

A contract between the Danish Ministry of Defence and the Norwegian ammunition company Nammo has been signed, creating the framework for re-establishing ammunition production at a factory in Elling, according to a 28 June Danish MoD press release. This agreement includes state co-ownership in Nammo Denmark A/S, with the Ministry of Business and Industry acquiring a minority stake of 15%, aimed at strengthening the security of supply in the ammunition sector.

The re-establishment of national ammunition production at the Elling plant will see Nammo Denmark A/S producing 155 mm and 120 mm shells, as well as 5.56 and 7.62 calibre cartridges. Production is anticipated to commence during the second half of 2027. This initiative, with approximately DKK 8.6 billion (approximately $1.38 billion/€1.15 billion) allocated from the Acceleration Fund in the current settlement period, seeks not only to re-establish production but also to build up the Danish Armed Forces’ ammunition stockpiles.

The decision to entrust Nammo AS with the responsibility for this re-establishment was made in February 2025 by the Minister of Defence and the Danish defence conciliation group, as part of a broader effort to enhance Denmark’s defence capabilities and reduce its reliance on external supply chains. 

As a consequence of re-establishing ammunition production, a larger security zone around the factory will be necessary. This may lead to the expropriation of a few nearby properties if voluntary agreements with owners cannot be reached. Prior to the contract signing, Minister of Defence Troels Lund Poulsen engaged with local citizens to discuss the specific plans and potential impacts on their daily lives, emphasising the importance of informing residents and ensuring they are “taken good care of.”

This development aligns with Denmark’s accelerated progress in rearming its defence forces. Following Russia’s invasion of Ukraine, Denmark has significantly increased its defence spending, with a notable EUR 6 billion increase to the defence budget. This funding is dedicated to accelerating the build-up of the Danish armed forces, enabling long-term investments in new capabilities and personnel. The focus is on increasing combat power and fulfilling NATO pledges. A key aspect of this ramp-up is securing supply chains and increasing self-sufficiency in critical areas like ammunition production, underscoring the strategic importance of the Elling factory.

The Elling plant itself has a long history of ammunition manufacturing, operating from 1676 until 1968, before being sold off in 2008 and eventually mothballed in 2020. The Danish government repurchased the plant in 2023 for approximately €2.8 million to facilitate this re-establishment of domestic production.

Calibre comment 

Denmark gave most or all of its artillery ammunition and howitzers to Ukraine, driving the country to seek replacements for both in a short timeframe as it became clear that the war would continue, and that Russia would likely pose a threat to NATO once it was over. However, Europe’s ammunition supply chain is congested with a limited network of suppliers and manufacturers. Those that exist often have framework agreements in place allowing their customers to draw down on production capability. Without a framework agreement, a state will likely have to wait much longer for ammunition. Because of this, and the general lack of production capacity in Europe compared with the anticipated needs in the event of war, many states are building their own or new factories. The UK has pledged to build six new factories, for instance, and Estonia is actively seeking companies to establish ammunition production at its new defence industrial park. At the end of 2024, Lithuania signed an agreement with Rheinmetall to build a domestic ammunition factory, and Poland is actively exploring different avenues to establish its own capabilities in this field. 

So, ammunition is a growing market, but it is a difficult one as it generally responds to needs which are generated by usage. The Ukraine war might keep usage high for the time being, but after that war is over, states will likely resort to stockpiling and then demand for new ammunition may well decline. This will place pressure on governments and companies to find routes to sustain their new factories during peacetime. 

By Sam Cranny-Evans, published on 2nd July, 2025. Credit for the featured image is the Danish MoD.