Rheinmetall Shares Reach New High On Plans For Ammunition Plant In Ukraine

One of the world's largest producers of artillery and tank shells secured a joint venture with a Ukrainian partner to produce 155mm caliber bullets. 

On Saturday, German defense company Rheinmetall announced it had signed a memorandum of understanding with an unnamed Ukrainian company at the Munich Security Conference.

The Mou was signed by Rheinmetall executives and Alexander Kamyshin, the Ukrainian Minister for Strategic Industries. 

Rheinmetall will have a 51% stake in the new artillery ammunition factory, while the Ukranian partner will hold 49%. The factory will begin producing a "six-digit number of 155mm caliber bullets per year" in 2025, according to the defense firm. 

"Demand for ammunition in many countries is enormous – first and foremost in Ukraine, of course. Our intention of establishing another joint venture underscores our support for Ukraine. This joint venture will make a vital contribution to the country's ability to defend itself – and thus to the security of all Europe", Armin Papperger, chairman of the executive board of Rheinmetall, wrote in a statement. 

Papperger continued: "We want to be an effective partner of Ukraine, to help rebuild the country's once powerful defence industry, and to assure Ukrainian autonomy in ammunition production. Already today, we are Kyiv's most important defence industry partner. We are currently processing several billion euros worth of projects on behalf of Ukraine, with more almost daily."

Shares of Rheinmetall in Europe rose 3% to a new record high. Shares are up nearly 40% on the year as war is big business. 

Last week, the International Institute for Strategic Studies wrote in its annual report titled "Military Balance" that the "current military-security situation heralds what is likely to be a more dangerous decade, characterized by the brazen application by some of the military power to pursue claims." 

Of course, MSCI's global defense index stands to benefit: 

The problem with the West is that Ukraine is running out of willing and able military-age men to fight while Western militaries face a severe ammunition shortage. Meanwhile, Russia secured a major victory in the war over the weekend.