Shortage of explosives threatens EU efforts to arm Ukraine

Europe’s push to make weapons for Ukraine has been hampered by a shortage of explosives, which industry insiders fear will delay efforts to increase shell production by up to three years.

Scarce supplies of gunpowder, plastic explosives and TNT have meant the industry cannot quickly meet expected EU orders for Ukraine, no matter how much money is spent on the problem, officials and manufacturers said.

The constraints in the supply chain underscore how the Russian invasion of Ukraine has exposed Europe’s inadequate arms stockpiles and weak domestic manufacturing capacity, which have been drained by decades of underinvestment.

“The fundamental problem is that the European defense industry is in no condition to engage in large-scale war production,” said a German official.

Europe is attempting to meet Kiev’s war needs by pumping money into the defense sector, particularly to encourage expansion of 155mm artillery production. There is an urgent need for shells, both to replenish national armories and to maintain supplies to the Ukrainian Armed Forces.

But manufacturers, industry leaders and EU officials are warning that increased demand could only push up prices, which have already risen by a fifth in the past year.

“It is very difficult to increase the production of artillery ammunition, especially heavy, large-caliber ammunition, in a short period of time,” said Jiří Hynek, chairman of the Union of Defense and Security Industries of the Czech Republic. “A new artillery factory is very easy, but how do you produce more artillery shells without raw materials?”

The comments come ahead of a meeting of EU foreign and defense ministers in Brussels on Monday to discuss a package of two proposals worth €1bn.

Defense industry officials say Europe has limited supplies of explosives like gunpowder, TNT and nitrocellulose, which are needed to make shells. “The bottlenecks for our capacities are above all [explosive] Powders, which are in short supply across Europe,” said one.

“It is not possible to increase nitrocellulose in a short period of time[production]. . . There are no significant producers of the raw materials we need in Europe,” Hynek said, referring to a key ingredient in gunpowder. “If I want to increase the production of gunpowder, it will probably take me three years.”

Explosia, a Czech state-owned manufacturer that is one of Europe’s largest suppliers of explosives to munitions factories, told the FT that its production of propellants for 155mm artillery “is running at full capacity” and will not be increased until 2026.

“Investments to further increase our production capacity are underway, but this is a three-year project and not a few months’ work,” said Martin Vencl, spokesman for the company.

This week, the Romanian government said it was in talks with US and South Korean companies to build a gunpowder factory in the country. The last such facility was shut down in 2004.

Even EU officials who have privately lobbied for the financial stimulus packages admit that European artillery manufacturers have made it clear to them that ramping up production will not be an easy task.

“We are in favor of strengthening the defense industry. But if the result of this EU initiative is that you have a second bidder for the same scarce resource, that will impact the price,” a German official said. “And the armaments companies are already getting rich enough.”

“We have to proceed carefully. . . Nobody wants to subsidize companies that are already making their mark,” he added.

Fábrica Municiones de Granada (FMG), one of the two Spanish manufacturers of 155mm artillery, has been working at full capacity since last October, producing shells for a trading company that resells them to Ukraine. But Antonio Caro, general manager of FMG, said it took four to five months to scale up the company because of the difficulty in obtaining basic materials and components.

“Our main problem is primary materials,” said Caro. “The ammunition supply is very tight worldwide because all factories, like us, are working at 100 percent capacity.”

“There aren’t that many factories [producing materials like TNT and nitrocellulose] in Europe and they’re also at 100 percent, so we have to start looking in India, in Korea and in other more distant countries,” he said.

Gianclaudio Torlizzi, an adviser to Italy’s defense ministry, agreed, saying: “We need to find new sources of supply. . . from countries that we had not traditionally approached,” he said. “Every European country wants to protect its raw material availability.”

The cost of basic materials has “doubled and sometimes tripled,” said Caro. These price increases and the surge in demand had led to higher ammunition prices, although the increase was less pronounced. A typical shell now costs 850 euros, about 20 percent more than before the Russian invasion, he said.

Currently, FMG, which is owned by the Slovak group MSM, has no plans to further increase capacity. “Hopefully the war will be over soon,” said Caro.

MSM also produces 155mm shells in Slovakia and said it “plans to build a new production hall” to increase artillery output, but declined to give a timeline.

Additional reporting by Raphael Minder in Warsaw and Amy Kazmin in Rome