It is planned that the plant will start operating from 2026 once it is built in Iecava, 35 km south of Rīga, although negotiations with the municipality of Bauska district are still in progress. The initial response of the municipality to the plans to build the factory was positive.
The factory will be built on territory belonging to the Ministry of Defense, where the infrastructure has already been established.
"In Iecava parish, there are a number of factors that were in favor of the choice of the specific place, but we are still in the process of coordination with the municipality. We will still need the government's authorization, but the production of ammunition has been one of the areas where we have to move with the development of our military industry," said the minister.
The construction of the factory and the purchase of equipment is estimated to cost 12 million euros. One million euros will be from European co-financing, and 11 million euros will be Latvian national financing. However, it should be expected that there will be significant additional expenses for the purchase of raw materials, the purchase of which is currently very difficult and expensive on the world market, because of high demand. It is expected that Latvia will purchase raw materials from partners in Italy.
About 15 million euros could be needed for the purchase of raw materials for one year and it is envisaged that the cost per charge will be less than the price at which the manufactured product can be sold [in other words, it should be profitble on a per unit basis, at least].
Sprūds emphasized in the interview that there is no reason for local residents to worry, as the munitions factory will be safe, and various assessments will be carried out before starting production. "Of course, a dialogue with the municipality is also necessary further, so that any questions, any possible misunderstandings are removed. In the end, it is also an economic contribution to the municipality, because jobs come here, economic activity comes here. Therefore, I think that it is a benefit for absolutely everyone – both the state, the defense industry, and also, of course, the local government," said Spruds.
At the end of last year, the government of Latvia supported the establishment of a State Defense Corporation to form joint ventures between Latvian and foreign businesses for the production of specific military-related products, to improve the security of supply.
One of the first projects implemented by the State Defense Corporation is the creation of a factory of 155 millimeter ammunition modular powder charges together with the Finnish-Norwegian company Nammo, as well as the French-Italian company Nexter (now rebranded as KNDS).
