Strategic shift on the NATO Eastern axis: crucial days for the European defense industry

The German industry Rheinmetall is accelerating its commitment on NATO's eastern flank: with two strategic announcements on 3 and 4 November 2025, it reported having significantly strengthened, through two agreements, European production capacity for munitions and key components.

On 3 November in Bucharest the joint venture Rheinmetall Victoria SA was signed with the Romanian company Pirochim Victoria, a subsidiary of Romarm. The agreement, signed in the presence of Romanian Prime Minister Ilie Bolojan and Rheinmetall CEO Armin Papperger, aims at the joint production of propellant powder and modular charges. The total investment planned for this plant, which will be built in Victoria, in Brasov county, exceeds 500 million euros.

This agreement responds to a strategic urgency. As Papperger stated, propellant powder remains a strategic bottleneck in the defence industry. By the way, in the defence sector propellant powder serves as the driving charge to launch projectiles and rockets, releasing a large volume of high-pressure gas that pushes the projectile down the barrel of a weapon. This principle is fundamental to the operation of small arms, cannons and missiles.

The new facility, in which Rheinmetall will hold a 51% stake, will contribute to the Group's goal of reaching an annual production capacity of 20,000 tonnes by 2030. The Romanian plant is expected to start production in 2028, with an annual capacity of about 300,000 modular charges and the creation of around 700 jobs. Energetic precursors such as nitrocellulose will also be produced, providing Romania with sustainable and strategic added value.

Only 24 hours later, i.e. yesterday, the spotlight moved to Lithuania, in the municipality of Baisogala, where the first stone was laid for the construction of a production plant for 155mm artillery ammunition. The ceremony saw the participation of Lithuanian President Gitanas Nausėda, Prime Minister Inga Ruginienė and CEO Papperger, as well as the German Deputy State Secretary for Defence, Nils Schmid, underlining the close bilateral partnership.

The new Lithuanian factory, managed by the jv Rheinmetall Defence Lietuva, Uab, represents the largest investment in the defence sector in the country's history, with a value of up to 300 million euros and the creation of some 150 jobs. The plant will cover about 340 hectares and will include a forging for casings and a filling plant, with an estimated production capacity in the tens of thousands of rounds per year. Operations are expected to begin as early as 2026.

In Lithuania a Memorandum of Understanding (MoU) was also signed to establish a Centre of Excellence for propellant powders, also managed by the joint venture, which will accompany munitions production with the manufacture of energetic components and modular charges.

President Nausėda described the plant as "a strategic step aimed at building deterrence as a precondition for peace", highlighting how the German Zeitenwende materialises in Lithuania in "steel, technology and, above all, in trust". At the same time, CEO Papperger underlined the importance of the two projects for the security of Europe and NATO, committing to ensure operational readiness on the crucial eastern flank.

With these two projects, Rheinmetall not only expands its presence in the Baltic countries (where it is already active in Lithuania with military vehicle maintenance and plans another artillery plant in Latvia), but also establishes two fundamental pillars of the war supply chain, filling Europe's production gaps: propellant powder production in Romania and artillery ammunition production in Lithuania.

This early November for Rheinmetall is completed today with the announcement, from Rome, of the first contract awarded to the joint venture (50% and 50%) Leonardo Rheinmetall Military Vehicles (see AVIONEWS). The temporary business association won the first supply of 21 "A2CS Combat" armoured vehicles for the Italian Army, with delivery of the first example scheduled by the end of the year. a step that, as declared by Executive Chairman David Hoeder, further unites the two companies and two of Europe's largest countries for the continent's strategic sovereignty.