Rheinmetall aims to increase ammunition production and HIMARS output in Germany By Reuters

By Sabine Siebold and Anneli Palmen

DUESSELDORF (Reuters) – German arms maker Rheinmetall is ready to sharply increase production of tank and artillery ammunition to meet strong demand in Ukraine and the West, and could start producing HIMARS multiple rocket launchers in Germany, the president told Reuters Executive Armin Papperger.

He spoke days before the heads of Germany’s defense industry meet for the first time with new Defense Minister Boris Pistorius, although the exact date has not yet been announced.

With the meeting, Pistorius aims to start talks on how to speed up arms procurement and increase ammunition supplies for the long term after nearly a year of arms donations to Ukraine have depleted German army stocks.

Rheinmetall makes a range of defense products, but is probably most famous for making the 120mm gun on the Leopard 2 tank.

“We can produce 240,000 rounds of tank ammunition (120mm) per year, which is more than the whole world needs,” Papperger said in an interview with Reuters.

Capacity for the production of 155mm artillery rounds can be increased from 450,000 to 500,000 per year, he added, which would make Rheinmetall the largest producer of both ammunition types.

In 2022, Rheinmetall will make between 60,000 and 70,000 tank and artillery shells, according to Papperger, who said production could increase immediately.

Demand for these munitions has skyrocketed since Russia’s invasion of Ukraine last February, not only because of its massive use on the battlefield, but also as Western militaries replenish their own stocks, preparing for what they see. as a greater threat from Moscow.

Papperger said that a new production line for medium-calibre ammunition, used by German-made Gepard anti-aircraft tanks in the Ukraine, for example, will come online by mid-year.

Germany has been trying for months to find new ammunition for the Gepard that its own army had decommissioned in 2010.

HIMARS PRODUCTION LINE IN GERMANY?

At the same time, Rheinmetall is in talks with Lockheed-Martin (NYSE:), the US company that makes the HIMARS (High Mobility Artillery Rocket System) multiple rocket launchers in heavy use with Ukrainian troops, Papperger said.

“At the Munich Security Conference, our goal is to reach an agreement with Lockheed Martin to start a production of HIMARS (in Germany),” he said, referring to an annual meeting of defense and political leaders in mid-February.

“We have the technology for the production of the warheads, as well as the rocket motors, and we have the trucks to assemble the launchers,” Papperger said, adding that a deal could generate investments of several hundred million euros that Rheinmetall would finance. An important part

Rheinmetall is also eyeing the operation of a new powder plant, possibly in the eastern German state of Saxony, but the 700-800 million euro investment would have to be borne by the Berlin government, it said.

“The state has to invest and we contribute our technological know-how. In exchange, the state gets a share of the plant and the profits it generates,” Papperger suggested.

“This is an investment that is not feasible for the industry on its own. It is an investment in national security and therefore we need the federal state,” he said.

The plant is needed as shortages in the production of special powders could become a bottleneck, hampering efforts to increase production of tanks and artillery shells, he said.

A few days before the meeting with the new defense minister, Papperger pushed for an increase in Germany’s defense budget.

“The 51 billion euros in the defense budget will not be enough to buy everything that is needed. And the money from the special funds of 100 billion euros has already been earmarked and partly consumed by inflation,” he said.

“100 billion euros sounds like a gigantic sum, but in reality we would need a package of 300 billion euros to order everything that is needed,” he added, noting that the special fund of 100 billion does not include the purchase of ammunition.

Even before Russia’s invasion of Ukraine, Germany was 20 billion euros short of reaching the NATO target for ammunition storage, according to a defense source.

Just to close the ammunition gap, Papperger estimates that the Bundeswehr (German armed forces) would need to invest three to four billion euros per year.

In talks with the minister, the defense chief expects a shift towards more sustainable long-term planning in German procurement, stretching out several years into the future, as the industry needed to be able to make its arrangements on time.

“What we’re doing right now is actually war storage: last year, we pre-financed between 600 and 700 million euros for goods,” Papperger said. “We need to get away from this crisis management, it’s crisis management when you buy (raw materials and other things) without having a contract, and get into a regular routine.”

(This story has been resubmitted to insert the word ‘million’, making it clear that the sum involved is €600-700 million, in the final paragraph.)