At the Põhja-Kiviõli defense industry park, ARCA Baltics Operations will manufacture 155‑millimeter artillery ammunition, mortar rounds of various calibers, and 122‑millimeter rockets. The company will invest €300 million of its own funds to build the necessary production infrastructure, including equipment and storage facilities. The ammunition manufacturer promises to create up to 1,000 new jobs in the area, the Estonian Centre for Defence Investment (ECDI/RKIK) announced.

"By establishing large‑caliber ammunition production, Estonia is taking an important step in developing its defense capability and ammunition industry. ARCA is a rapidly expanding defense industry company that in recent years has developed a significant ammunition production center in Turkey," Estonian Defense Minister Hanno Pevkur said in a press release.

"ARCA Baltics Operations, established in Estonia, will build a factory in Põhja-Kiviõli where the primary focus will be on producing large‑caliber 155‑millimeter ammunition, including long‑range variants. Under the agreement, the Estonian state also has the option to procure ammunition from the large‑scale producer if it so wishes. The contract signed today also brings an investment worth hundreds of millions of euros into the Estonian economy and creates hundreds of new jobs," Pevkur added.

The Estonian company ARCA Baltics Operations OÜ is linked to the Turkish defense industry group ARCA Defense, whose export volume last year exceeded €3 billion. About 5,000 people work at the group's nine factories, and in addition to the defense and aerospace sectors, the group is also active in the energy and construction sectors.

Under the signed agreement, the Estonian state will grant the company the use of a 141‑hectare plot of land at the Põhja-Kiviõli defense industry park and will invest up to €10 million in access roads, fencing, and the creation of the electricity, gas, and water connections needed for production.

"ARCA has successfully built up substantial large‑caliber ammunition production in Turkey, and their recent experience in establishing a new ammunition plant and their market knowledge are a significant advantage," said Tambet Tõnisson, head of the state assets division at the ECDI. "The company's business plan and stated land requirements are also appropriately aligned with each other and fit well within the Põhja-Kiviõli defense industry park."

The parties are cooperating to ensure that ammunition production can begin in 2028. The official ceremonial signing of the agreement will take place in early May in Turkey during SAHA Expo 2026.

To identify companies that will begin production in Estonia's planned defense industry parks, the Estonian Centre for Defence Investment announced a selection process for the use of state property in early April 2025. A national designated spatial plan has been approved for the Ermistu and Põhja-Kiviõli sites, while planning procedures are ongoing for the Piirsalu and Aidu pre‑selected areas.

Four companies will be able to build their factories at the defense industry park being established in Ermistu, Pärnu County: Nitrotol OÜ, Frankenburg Technologies OÜ, Infinitum Strike OÜ, and the UK company Thor Industries Ltd via its Estonia‑registered subsidiary Odin Defence OÜ. The park will likely have space for the production facilities of one or two additional companies.

ERR reported in early April that a company with Swedish background would begin operations at the Põhja-Kiviõli defense industry park, but that information later proved to be inaccurate.

--

Follow ERR News on Facebook and X and never miss an update!