Rheinmetall to build new ammo plant in Latvia after securing huge order for Eastern Europe

In a move that reflects the ramp-up of Europe’s defence manufacturing capabilities, German arms giant Rheinmetall has announced a major new contract to supply ammunition to an Eastern European nation, while simultaneously unveiling plans to build a new artillery shell factory in Latvia.

The two announcements, made on September 29 and 24, highlight the urgent need to replenish stockpiles and expand production capacity in the wake of the war in Ukraine. In a deal worth €444 million (£385m/$462m), Rheinmetall will act as a subcontractor to Global Military Products, supplying 155mm M107 and 105 mm M1 projectiles for an Eastern European customer. 

Deliveries are scheduled to begin in 2026 and be completed by June 2027. This contract alone represents a significant boost, with €274 million (£238m/$285m) in new orders now booked, on top of a €170 million (£147m/$177m) pre-order. Rheinmetall plans to increase its production of 155mm artillery shells to 1.5 million per year by 2027 in a bid to meet the dramatically increased demand. 

Just days after this order was confirmed, the company announced its partnership with the Latvian government to build a new ammunition facility in the country. A Memorandum of Understanding was signed in Hamburg on 24 September, outlining a joint venture with the Latvian State Defence Corporation. The new plant, a €275 million (£239m/$286m) investment, will feature a state-of-the-art production line for forging and filling 155mm shells.

Latvian Prime Minister Evika Siliņa called the project a “clear step towards strengthening Latvia’s security and developing our defence industry.” The facility is intended to supply the Latvian National Armed Forces while also contributing to the security of supply chains for partner countries.

Armin Papperger, CEO of Rheinmetall AG, expressed his pleasure at being able to “contribute to Latvia’s national sovereignty in the field of ammunition.” He added that the new production line would “strengthen our position as the world’s leading manufacturer of artillery ammunition.”

Construction of the plant is set to begin in spring 2026, with production expected to start approximately a year later. The facility will create at least 150 local jobs and integrate regional companies into its supply chain. The project mirrors a similar new-build factory that Rheinmetall is already constructing in neighbouring Lithuania, a clear sign of the company’s commitment to building out defence manufacturing hubs across Eastern Europe.

Latvia joins several other European countries that are seeking out domestic ammunition production. Denmark has signed a deal with Nammo, and Poland has an MoU with Northrop Grumman for its austempered ductile iron shells. The UK plans to build six munitions factories, according to a commitment made on the back of the Strategic Defence Review, and Estonia is working to attract ammunition manufacturers to its new defence industrial park. 

Calibre comment 

Producing artillery ammunition is a cost- and energy-intensive process, but the facilities can-in theory-remain in place for many decades without significant modernisation. As long as the calibre of artillery does not change in that time. So, this investment in artillery production should be seen as a very welcome boost for the short- to mid-term as it will add capability to Europe’s artillery ammunition production. Nonetheless, it is important to bear in mind the potential scale of ammunition consumption in a large war: Russia may have fired as many as 14 million different types of artillery ammunition between August 2023 and April 2025. Russia is a unique example and very reliant upon artillery. But even so, NATO should expect to fire several million rounds of artillery ammunition if it should ever go to war with Russia. This means that building additional capacity to produce those shells is a necessary precaution. 

However, production is not the only cost, and one of the challenges that has been difficult to overcome in Europe’s support for Ukraine has been the lack of stockpiled ammunition. Stockpiling is expensive, it consumes space and money, and preserves ammunition for use in the event that there is a war. However, if a war happens, then stockpiles are essential for fuelling the opening stages and buying time to allow production to increase. This is what Russia’s strategic ammunition reserves, and eventually North Korean ammunition, were used for. 

By Sam Cranny-Evans, published on September 29, 2025. Credit for the lead image is Rheinmetall.