Estonia to host €300 million ammunition plant

Estonia is set to strengthen its defence manufacturing capabilities with the construction of a €300 million ammunition factory in the northern town of Kiviõli, a project expected to become one of the country's largest defence industry investments.

ARCA Baltics Operations, the Baltic subsidiary of Turkish defence company ARCA Defence, plans to begin production at the facility in 2028. The factory will be located in the North Kiviõli defence industry park and is expected to create up to 1,000 jobs, according to Estonian World.

The plant will manufacture 155-millimetre artillery ammunition, a key munition widely used by NATO forces, as well as mortar rounds of various calibres and 122-mm rockets.

The project reflects growing efforts across Europe to expand domestic defence production amid heightened security concerns and increased military spending.

ARCA Baltics Operations is affiliated with ARCA Defence, a Turkish defence industry group that reported export volumes exceeding €3 billion last year. The company operates nine factories and employs around 5,000 people across its defence, aviation, energy and construction businesses.

Under an agreement with the Estonian government, the company will receive access to a 141-hectare site within the North Kiviõli defence industry park. The state will also invest up to €10 million in supporting infrastructure, including access roads, fencing and utility connections for electricity, natural gas and water.

Estonian authorities and the company are working to ensure that production can begin as scheduled in 2028.

The investment forms part of Estonia's broader strategy to develop a domestic defence manufacturing base. In April 2025, the Estonian Centre for Defence Investments launched a tender process to select companies for operations in newly established defence industry parks.

In addition to North Kiviõli, Estonia has designated defence industry sites in Ermistu, Piirsalu and Aidu. Spatial planning has already been approved for the Ermistu and North Kiviõli locations, while planning procedures for the remaining sites are ongoing.

Four companies have already been selected to establish operations at the Ermistu defence industry park in Pärnu County: Nitrotol, Frankenburg Technologies, Infinitum Strike, and UK-based Thor Industries through its Estonian subsidiary Odin Defence. Officials say the park could accommodate one or two additional manufacturers.

By Sabina Mammadli