Short Noticed Call for Ammunition Production Back in Denmark

The requests are all aligned with the fact that the Danish Ministry of Defence (MoD) in October of 2023 acquired an industrial area in the northern Jutland, which was previously used as an ammunition production facility. The MoD state operation at this site called "Krudten" (meaning the "powder site") was terminated almost 20 years ago when the Danish state sold off the property to a private entity, Denex, owned by Spanish Expal Systems (which is now fully integrated in German Rheinmetall). In 2020 Expal ceased production at the site, which was divested for real estate development.

Thus in 2020 military ammunition production in Denmark was history – an inevitable consequence of how security was perceived by Danish decisionmakers. But the Russian invasion of Ukraine in February 2022 changed that perception overnight – and realizing a dramatic shortage on ammunition in almost all calibres made the MoD look for opportunities to restart a Danish production. The re-acquisition of the north Jutland site was a first step even if the location no longer possessed any special properties such as licenses and permits relevant for that purpose. But it has a history.

The RfIs represent the next step. They fall in three parts, dealing with three separate elements of ammunition production and management:

• Part 1 specifies that the manufacturer “shall establish and operate a filling facility or other production facility for large-calibre ammunition at Krudten, addressing bottlenecks in production or, as appropriate, elsewhere in Denmark”. Also, this part includes the potential for ammunition storage in Denmark that is managed by the contractor. Preference is expressed for a contractor from one of the Nordic countries. The focus on a filling/casting plant is dictated by the fact that "DALO assess that there is an urgent need for large caliber ammunition, especially 155 mm artillery ammunition and 120 mm mortar ammunition. In particular, for these types of ammunition there is a severe lack of production capacity in the current market".

• Part 2 concerns the establishment of small arms ammunition production in Denmark, again also with the potential for ammunition storage. Specifically, this part of the RfI is intended to assess “market interest in establishing and operating a production facility for small-calibre ammunition at Krudten or, as appropriate, elsewhere in Denmark”. It further specifies that a Danish (national) small arms ammunition production company is required, potentially in collaboration with a strategic partner. “Small arms ammunition” is defined as calibres from 5.56 mm NATO (5.56×45 mm) up to 12.7 mm NATO (12.7×99 mm) and further specifies that “The production is not to be exclusively for supplies to the Danish Defence”- indicating that MoD may have an appetite to get a revenue from sales to the civilian and/or export markets.

• Part 3 provides for an ammunition stockpiling and management enterprise in Denmark to “ensure security of supply for the most critical ammunitions for DALO”.
  
  

In the overall statements accompanying the RfIs the Danish MoD expresses a distinct preference to co-operate with national and regional (Nordic) operators with small/medium size or niche characteristics. This is not a surprise. But DALO also highlights the need for contractors to 'join forces' indicating that DALO realizes that non-national and non-Nordic business participation may be required to ensure proper capabilities and capacities that are not available locally.

This is a direct invitation for both national, Nordic, and international entities to form new partnerships in order to fit into the clear picture of the 'perfect supplier'. Indeed, all interested players should pay particular attention to opportunities to make use of the Danish scheme for Industrial Cooperation (discharge of offset obligations). (No export of defence equipment to Denmark without offset)

It is also interesting to note that making use of the reacquired 'Krudten' does not explicitly appear to be a condition – but with the political capital invested in that transaction it may be prudent to go some lengths to accommodate the wish.

The deadline for responses to the RfIs is already on 1 March 2024 at 1300 CET.

Horten is ready to advise on the matter including facilitating possible contacts to form partnerships between relevant operators.