In search of profit: Rheinmetall factories in Ukraine
Participants in the signing of the memorandum of understanding
The German military-industrial concern Rheinmetall is actively involved in supporting the Kyiv regime. For shipment to Ukraine, he produces new products of various kinds, and also restores and prepares existing ones for transfer. In addition, there are plans to launch production directly on Ukrainian territory. So, last year an agreement emerged on the construction of a plant for the production of armored vehicles, and recently we agreed on the joint production of ammunition.
New memorandum
The other day the next Munich Security Conference took place in Germany. During this event, the Rheinmetall concern and an unnamed Ukrainian enterprise signed a memorandum of understanding on the creation of a joint production of ammunition. Such a memorandum could be of great importance for the Kyiv regime, and its senior representatives were present at the signing ceremony.
The parties revealed some details of the memorandum and planned cooperation, both organizational and production. It is reported that the Rheinmetall concern, which bears the bulk of the work and costs, will receive 51% of the joint venture. The remaining 49% will go to the Ukrainian partner.
Where and when the ammunition plant will be built has not yet been specified. It is expected to be able to produce six figures annually of NATO-standard 155mm artillery rounds. Both shells and propellant charges for them will come off the assembly line.
During the signing of the memorandum, loud speeches were predictably heard. Thus, the management of Rheinmetall announced its desire to continue cooperation with the Kyiv regime and remain a profitable partner for it. In addition, the concern wants to help Ukraine restore the lost competencies and production capacities of the military-industrial complex. Ultimately, the new production will have to provide the Ukrainian artillery with the ammunition it requires and achieve the desired fire performance.
155-mm shells
It is worth paying attention to the fact that so far we are talking only about a memorandum of understanding. A document of this kind is only the first step towards the future launch of production. To implement the plans from the memorandum, it is necessary to work out and sign full-fledged contracts, and then build production facilities based on them. All this takes time, and even the approximate timing of the launch of a new plant cannot yet be predicted.
Second agreement
It is curious that the new memorandum, signed recently in Munich, is not the first of its kind. A few months ago, a similar document appeared on possible cooperation in the production of armored vehicles. It is likely that the parties have already begun implementing such plans and have even completed some of the assigned tasks.
Let us recall that in May 2023, German media reported that Rheinmetall plans to launch assembly lines for armored vehicles of its own design in Ukraine. It was argued that such a plant, through cooperation with German enterprises, would be able to produce up to 400 combat vehicles per year.
A few months later, the concern's management clarified some details of such plans. It reported that production facilities could be deployed at existing Ukrainian enterprises of the military-industrial complex. It is possible to rent existing production lines, which will be converted and reconfigured for the assembly of armored vehicles of NATO standards.
The main agreement on such cooperation was signed in October 2023. Rheinmetall and the Ukrainian concern Ukroboronprom agreed to create a joint venture that will work with the equipment. According to the adopted plan, at the first stage this organization will only be engaged in the maintenance and repair of existing foreign-made machines. The assembly of armored vehicles will begin in the second stage, but the launch date is unknown. Perhaps even the organizers of the joint venture themselves do not know it.
The Rheinmetall Skynex artillery system is one of the concern's latest developments in the field of air defense
Obvious Benefits
Over the past two years, the Rheinmetall concern has been actively involved in providing assistance to the Kyiv regime and has no intention of abandoning this. Moreover, it is planned to expand cooperation with Ukraine, for which new agreements are signed. It is quite possible that the processes of international interaction will not stop there and will produce new results.
Rheinmetall supplies Ukraine with a fairly wide range of various types of products. Most notable are the shipments of new-production artillery shells. Recently, several air defense systems were transferred, incl. the latest Skynex model. In addition, the concern is involved in preparing the supply of armored vehicles. Cars from storage or from third countries undergo repairs and restoration, after which they are sent to the recipient.
It is not difficult to guess that all this work is not carried out for free. They are paid for by the German government, international structures of the European Union, etc. From the point of view of the Rheinmetall concern itself, we are talking about the most ordinary contracts for production or modernization. The same applies to new agreements on the creation of joint ventures with Ukraine - they should also bring benefits to the concern.
Two signed agreements concern the production of armored vehicles and shells, which indicates benefits for the German concern. Thus, modern armored vehicles with a high level of performance are not cheap and allow the manufacturer to make good money on their sale. In turn, artillery shells have a relatively low cost, but are produced in large quantities. Moreover, in recent years, ammunition has become significantly more expensive. Thus, both areas of cooperation will allow Rheinmetall to gain the greatest benefit in the current situation.
Obvious risks
However, not everything is so simple, and commercial success is not guaranteed. To produce and sell new products, it is necessary to build appropriate production lines. Under current conditions this is unlikely to be possible. In addition, other difficulties of one kind or another arise. The main source of problems is the chosen location of new plants. To simplify logistics and to obtain other advantages, they want to build them directly in Ukraine.
The very possibility of organizing armored tank and ammunition production on Ukrainian territory raises doubts. Any plant needs raw materials, energy and specialists, and also depends on the supply of necessary components from other enterprises. Whether it is possible to solve all these problems in Ukraine in its current state is a big question. Even with the participation of foreign specialists, all this will be extremely difficult, if not impossible.
With all this, serious risks arise. Any military enterprise on Ukrainian territory is a potential target for Russian strikes for the purpose of demilitarization. The presence of such risks makes the construction of new factories a dubious undertaking with a predictable outcome.
However, it cannot be ruled out that Rheinmetall is counting on just such a development of events. Building a production facility requires money, and recovery from impacts is not free either. The concern will have the opportunity to receive additional financing for the restoration of enterprises and other work. In this case, the presence of a working production is not important from the point of view of receiving money.
For your own benefit
Thus, the Rheinmetall concern has achieved the position of one of the leading European suppliers of military products to Ukraine and is not going to give up its position. New agreements have been signed under which the supply of its products will continue, and with new opportunities.
The concern's interest in the topic of assistance to Ukraine is quite understandable. First of all, he gets the opportunity to make money on relevant contracts, already received or expected. In addition, Rheinmetall demonstrates its commitment to European ideas and concepts, which to some extent improves its reputation among potential customers and contributes to further contracts. In the end, it all comes down solely to money and profit.
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