Bulgaria and Rheinmetall Seal Strategic Deal to Build Ammunition and Gunpowder Factory
Bulgaria has signed a landmark agreement with Germany’s Rheinmetall to build a gunpowder and ammunition factory producing 155mm shells and modular charge systems. The €500 million joint venture with VMZ–Sopot will create nearly 1,000 high-skilled jobs.
SOFIA — Bulgaria has signed a landmark agreement with Germany’s Rheinmetall to build a gunpowder and ammunition factory, marking one of the largest industrial and defence investments in the country’s modern history.
The facility — a joint venture between Rheinmetall and Bulgaria’s state-owned arms manufacturer VMZ–Sopot — will produce gunpowder, 155mm artillery shells, and modular charge systems, significantly boosting Europe’s ammunition production capacity amid the continent’s ongoing rearmament drive.
Under the terms of the deal, Rheinmetall will hold a 51% stake in the joint venture, while Bulgaria will finance its share through loans under the EU’s SAFE mechanism, aimed at strengthening Europe’s defence supply chains.
The new plant is expected to be operational within 14 months, with an initial capacity of up to 100,000 artillery shells per year, according to Rheinmetall CEO Armin Papperger, who signed the agreement in Sofia alongside Bulgarian Prime Minister Rosen Zhelyazkov and VMZ CEO Ivan Getsov.
“This is a huge step forward in Bulgaria’s industrial and defence capabilities,” Prime Minister Zhelyazkov said at the ceremony. “It will not only strengthen our economy but also contribute to Europe’s collective security and resilience.”
The project will create nearly 1,000 high-skilled jobs and re-establish Bulgaria as a major player in the European defence industrial landscape. During the Cold War, Bulgaria was one of the largest arms producers in the Eastern Bloc, specializing in small arms, ammunition, and light armored vehicles.
Following the collapse of the Warsaw Pact, much of that industrial capacity was lost. However, Russia’s full-scale invasion of Ukraine in 2022 has triggered a renewed push across Europe to rebuild domestic production and reduce dependence on external suppliers.
Rheinmetall’s investment in Bulgaria is part of this broader shift — a move to decentralize and expand Europe’s defence production base closer to the eastern flank of NATO.
The factory’s establishment underscores Bulgaria’s growing role as both a supplier and strategic location for European ammunition production, aligning national industry revitalization with the continent’s collective defence priorities.
