Interview with the Board Member of the “State Defence Corporation”: construction of a modular charges plant to begin in 2025

The state-owned company “State Defence Corporation” Ltd. (the Corporation), established last year, is currently preparing to begin construction of a new modular charges plant in 2025 and, upon completion in 2026, to install equipment and commence production, the Corporation’s Board Member, Ingrīda Ķirse, said in an interview.

“The ammunition production project is currently in its first phase of practical implementation. We have already completed the initial phase, meaning that all binding agreements have been signed. We are a consortium of five countries and five different companies, and each of us is now entering the implementation stage in our respective country,” I. Ķirse explained.

She noted that the Corporation is currently taking practical steps to begin construction, as the project plan foresees that the modular charges plant must be operational by the third quarter of 2026. I. Ķirse emphasised that the project has been developed from scratch, and the Corporation is now preparing to launch construction in 2025 and, upon completion in 2026, to install equipment and start production.

Asked whether the construction procurement process has already been prepared and announced, I. Ķirse said that the Corporation is working on all stages simultaneously. The Ministry of Defence is also preparing the necessary documentation on its side, as a decision by the Cabinet of Ministers is required. She stressed that the plan is clear and detailed along a defined timeline and expressed confidence that it will be implemented accordingly.

In cooperation with the Ministry of Defence, the Corporation is also maintaining close and regular communication with the Bauska municipality, as approvals at the local level will be required.

I. Ķirse explained that the Corporation has received a shareholder Letter of Expectation – effectively a roadmap for the company – which sets out its objectives, including how it is to finance its operations. It clearly states that, initially, the company will rely on state budget funding allocated by the Ministry of Defence, but in the long term the Corporation must not depend solely on public funding.

She added that the Corporation must therefore explore additional financing sources for its projects, such as European funds and NATO funding.

“We are also very optimistic about financial markets both in Latvia and abroad. As projects are implemented, we will gradually generate our own revenue, which can then be used to finance future projects,” I. Ķirse said.

Speaking about the ammunition production project, I. Ķirse noted that a national co-financing component is required, and efforts are ongoing to secure it. Funding will be needed both for capital investment – construction and related infrastructure – and for initial working capital before the company begins generating planned revenues.

Asked about the total funding required, I. Ķirse said that EUR 11 million is earmarked for construction and approximately EUR 15 million for working capital. The latter is needed for the timely procurement of raw materials, maintaining inventory, and ensuring continuity of production.

I. Ķirse explained that the European project is designed to address significant bottlenecks in ammunition production, from raw materials to finished products. The consortium is tackling both ends of the supply chain.

“I must respect confidentiality, so I cannot disclose the specific role of each partner in the project. However, I can say that each participant is addressing one of these challenges. All partners are working towards the shared outcome of producing modular charges,” she said.

She added that the Corporation will implement the ammunition plant project itself and will also assemble the final product – modular propellant charges. The company’s strategic objective is to become a holding company in the future. In this context, it will later be assessed whether ammunition production should be transferred to a subsidiary, although no concrete plans have yet been made.

Asked whether potential customers for the charges have already been identified, I. Ķirse said that all Corporation projects will be production-oriented, and the National Armed Forces will always be the company’s primary client.

“This will also be the case for this project. However, as this is a European project involving five partners, we are not addressing only the needs of the National Armed Forces. The planned production volumes of modular propellant charges are designed to supply other partners as well. The planned annual output is 50 000 charges,” she said.

She added that, first and foremost, the project serves as a security guarantee to ensure that the National Armed Forces have ammunition available in the required quantities. At the same time, the ammunition manufacturing sector is highly competitive, and this project represents the Corporation’s entry point into international supply chains.

It has previously been reported that the Latvian government supported the establishment of the state-owned military industry company, the Corporation, at the end of last year.

Considering the needs of Latvia’s National Armed Forces, the Corporation will establish joint ventures with domestic and foreign companies to produce specific products, thereby strengthening security of supply.

One of the first projects being implemented by the Corporation is the establishment of a plant to produce modular propellant charges for 155 mm ammunition.

Source: Sargs.lv