The German manufacturer Rheinmetall, which will build a powder factory for ammunition in Brasov County, will be obliged to involve local suppliers in the production chain, which means an expansion of the economic zone, not only for the arms industry, said on Monday, the Minister of Economy, Digitalization, Entrepreneurship and Tourism, Radu Miruta, after signing the final agreement with the German company at the Government.
"This is the first time we have introduced a mandatory condition to involve suppliers from the local production chain. We are no longer in a situation where Romanian companies ask to become suppliers for a new factory. We are in a situation where the German manufacturer is obliged to involve these suppliers, and this means an expansion of the economic zone, not just for the armaments area. We are discussing metal processing, the petrochemical area, fine mechanics. There are companies from Romania that are analyzing how to adapt their production lines in order to be suppliers for the new factory. It is an aspect that we will take into account in absolutely all the contracts that we will make through SAFE for the next period. It is proof that when we negotiate seriously, when we understand the needs of the local business environment, we manage to put conditions in a contract that help the business environment," the minister explained.
She stated that, during the negotiations, the previous agreements were modified, and the Romanian state benefits from an advantage of 93 million euros from a total investment of 500 million euros.
"This amendment involved changing some conditions regarding the license costs that the Romanian state pays. There was a change from 8% to 6% regarding the license costs, related to the turnover, somewhere around 200 million euros per year. Even though the Romanian state has 49% and the German company has 51% of the participation, we additionally introduced some reserved conditions. This means that the Romanian state decides important aspects of this collaboration regarding certain loans, sales, various contracts. So, the Romanian state, even if it is a minority, reserves the right to have a veto decision for these important aspects," Miruta specified.
In addition, the contract increased the rent that Rheinmetall AG pays for the hall it will build in Victoria, from 6 million euros to 9 million euros per year. Also, the depreciation was reduced from 25 years to 15 years, "which generates an advantage for the Romanian state."
"We will use this SAFE financing instrument to revive the defense industry in Romania. We have factories in the national defense industry that have not benefited from investments for about 30 years, they are not in a very competitive technological situation. We use SAFE, which is interesting for companies that have very advanced technology, to join this technology to the defense industry in Romania. The Romanian state has production facilities that cannot be bought no matter how much money others have, it has very well-trained employees. These things are to the advantage of the Romanian state," the Minister of Economy also said.
According to him, other contracts regarding the defense industry will follow after the one concluded with Rheinmetall AG.
"It is proof that Romania is not only in a position to import defense equipment, but we have the capacity to produce here, obviously, in correct interaction with other companies. Announcements will follow in the coming period for other production areas in the national defense system. We are in a situation where we are analyzing all possible options, with all companies that are eligible to 'draw' money from SAFE," Miruta added.
Minister Radu Miruta, participated, on Monday, together with Prime Minister Ilie Bolojan, in the meeting with representatives of the German defense company Rheinmetall, a delegation led by CEO Armin Papperger. During the meeting, the final collaboration agreement was signed for the realization, in Victoria (Brasov County), of a strategic investment: a powder factory for ammunition, built from scratch.
"Rheinmetall-Victoria SA will now be the most modern company in the world in the field of producing double and triple base powders. These powders are needed throughout the world, especially in Europe, to support the defense forces - including in Romania," said the Rheinmetall CEO.
The factory to be built will have a production capacity of approximately 60,000 rounds, or 300,000 modular rounds, which is one of the largest capacities in the world for artillery systems. It will also produce 200 tons of powder for local needs, mainly for the 120-millimeter caliber and medium calibers.
The investment is worth around half a billion euros and will create around 700 new jobs. Construction of the factory will begin in 2026, with production scheduled to begin in two years.
"Through this partnership, Romania is beginning to emerge as a potential player in the defense industry in Southeast Europe. I am glad that Rheinmetall considers us an important and serious partner and that it is consolidating its presence in our country. (..) I thank the company for its willingness to work with suppliers from Romania in such a way that competitive Romanian companies can develop their production capacities and integrate into the European defense industry chain. I thank our negotiation teams, Minister Miruţă, the German embassy and all those who have been involved in this project over time and with whom we managed to close the signing of this contract today," declared Prime Minister Ilie Bolojan.
Romania will benefit from 16.68 billion euros in funding through the European Security Action for Europe (SAFE) mechanism, according to the provisional allocations announced by the European Commission for the Member States. It is the second largest allocation established by the Commission. The list of projects must be sent to the Commission by 29 November.
In these days, negotiations for accessing European funds through the SAFE program will be finalized, with the endowment plans then being approved in the CSAT meeting in the second half of November and subsequently presented to the European Commission.
Participation in the SAFE program has three components: defense, budgetary, and infrastructure.
The SAFE (Security Action for Europe) instrument is a temporary financial mechanism of the European Union, with a budget of 150 billion euros, in the form of low-interest loans, for which 19 member states, including Romania, have expressed interest.
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