More European Firepower for Ukraine: Local Cannon, Shell Production, Capital Investment

 May 15, 2025

Ukrainian Ground Forces cannon and howitzer gunners got more good news from Europe this week with new and substantial commitments by Germany and France to get more firepower into the hands of the Armed Forces of Ukraine’s (AFU) artillery.

Officials from Ukraine’s national defense production company Ukroboronprom on Tuesday in Madrid signed an agreement with Rheinmetall, Germany’s biggest arms manufacturer, to launch a joint venture that will manufacture 155mm caliber artillery shells in a Ukrainian facility, with initial production planned in 2026.

The memorandum expanded cooperation between Ukrainian state arms producers and Rheinmetall. In June 2024, Ukroboronprom and Rheinmetall opened a repair facility in Ukraine, servicing primarily former German Bundeswehr armored and light vehicles in service with the AFU.

Ukraine announced the launch of a limited production run of 155mm shells in September 2024. According to Ukrainian defense industry reports, once operational, the Rheinmetall line should have a capacity of 80,000-100,000 shells/year.

The Ukrainian security publication Defense Express in a Wednesday article on the deal said:“The agreement… reflects Ukraine’s urgent need to scale up domestic production of critical military supplies amid Russia’s full-scale invasion. With artillery munitions playing a central role in Ukraine’s defense strategy, the new project aims to further strengthen the country’s resilience and independence in arms manufacturing.”

Thanks to solid assistance particularly from Germany, Czechia, and Denmark, the terms of the artillery fight fought by Ukrainian gunners against their more heavily armed Russian opponents has shifted from around five and even ten Russian shell fired for every Ukrainian shell fired back in early 2024, to a rough parity in most combat sectors in March-April 2025.

On Wednesday, President Emmanuel Macron, in comments to Parisian media, said that all Caesar howitzers manufactured by Versailles-headquartered KNDS France for the fiscal year 2025 will be transferred to the AFU. Ukrainian defense media reports estimated output of the weapon, usually considered one of the top two or three long-range guns operated by either side in the Russo-Ukraine War, at around 100 cannon.

Ukraine domestically produces a wheeled 155mm howitzer, similar to the French Caesar, called the 2S22 Bohdana, according to news reports at a pace of 30-36 systems a month. The Macron government’s commitment of Caesar guns for AFU use, augmenting the Bohdana stream, effectively increased new cannon delivered to the AFU by about a quarter.

Denmark, with a $600 million seed investment in late 2023, drove the kick-start to Bohdana production in Ukraine, which has turned the former Soviet republic, probably, into the world’s most prolific manufacturer of 155mm cannon systems. On May 9, Copenhagen announced it would head up a European Union project using interest income earned by Russian money frozen in EU banks to fund more Ukrainian arms manufacturing projects, potentially worth up to $925 million.

A European Union official speaking in Brussels said the customs union will allocate an additional €900 million ($1.008 billion) toward the purchase of weapons and ammunition for Ukraine, upping the EU total recent support commitments to Ukraine’s defense industry to €3.3 billion ($3.69 billion).

In a speech made at the EU-Ukraine Defense Industry Forum in the Belgian capital on May 9, EU Deputy Secretary General Charles Fries said the money would come from interest earnings (Fries: “extraordinary revenues”) from Russian capital assets frozen in EU banks and other financial institutions.

The funds would be “invested in the cutting edge of the Ukrainian defense industry, for example, the production of drones and missiles,” Fries said, in comments reported by Belgian media.

Impounded Russian money is also being sent to Kyiv by the EU as the custom union’s contribution to a G7-led fiscal assistance project for Ukraine called the Extraordinary Revenue Acceleration (ERA) initiative. The project uses immobilized Russian state assets in the EU to loan the Ukrainian government money for state needs, with the principal and interest paid back by earnings from Russian funds frozen in the EU.

To date, the EU Finance Ministry has used blocked Russian funds to transfer to Ukraine about €18.1 billion ($20.3 billion) as the EU part of ERA support. Along with the US, Britain, Canada, and Japan – who are not EU members – the G7 project plans to shift €45 billion ($50.4 billion) in Russian money to support Ukraine’s war effort, a May 8 EU statement said.

European demand for advanced weaponry and munitions, driven by the Russo-Ukraine War and a shift by many NATO states from a cooperative diplomacy strategy toward the Kremlin to emergency re-armament, has in a half year rocketed Rheinmetall share prices from around €475 ($532)/share in early November 2024 to a peak €1,701 ($1,907)/share on May 9.

A Rheinmetall early May quarterly earnings statement said strong demand and long-term orders had increased group sales by 46% in the first three months of 2025 to €2.3 billion ($2.57 billion), and income in Rheinmetall’s defense businesses over the same period jumped 73%, improving profit margin to 8.7%. The company’s backlog of orders widened by 181% and currently stands at €63 billion ($70.6 billion).

Weapons and ammunition sales over the three months, worth €599 million ($671 million), set an all-time-record for the corporation.

“The increase compared to the same period of the previous year is attributable in particular to higher ammunition deliveries. Important projects included orders for artillery ammunition for NATO countries and Ukraine, as well as increased sales of tank ammunition,” the statement said in part.

https://www.kyivpost.com/post/52724