The contract is designed to both build up the German ammunition stockpile and help supply Berlin’s allies, including Ukraine, starting from 2025.
The German government is the primary buyer under the deal, including the Netherlands, Estonia, and Denmark. An unspecified portion of the artillery rounds has been earmarked for Kyiv.
The munitions will be produced at a new factory under construction in Unterlüß, Lower Saxony, Germany. Rheinmetall will handle the full production cycle at this facility.
From the second year of production, the factory's annual capacity will be 100,000 munitions, eventually rising to 200,000 per year.
By the end of 2024, Rheinmetall plans to produce 700,000 shells, with the new manufacturing capabilities in Germany allowing this volume to increase to 1 million.
The new plant will supply shells to the Bundeswehr as well as to Ukraine and Lithuania.
Earlier in June, Rheinmetall opened the first joint servicing and manufacture facility for armored vehicles in Ukraine, with plans for at least three more.