Germany to Place Rheinmetall Ammunition Order Worth $130 Million

(Bloomberg) -- Germany is poised to place its latest major order with a domestic defense manufacturer in a push to replace depleted stocks of ammunition for rapid-fire howitzers supplied to Ukraine.

Most Read from Bloomberg

• These Are World’s Most Expensive Cities for High-Class Living

• Noises Detected in Search for Titanic Sub as Oxygen Dwindles

• Hedging Failure Exposes Private Equity to Interest-Rate Surge

• What We Know About the Missing Titanic Submersible

• Titanic Explorer Says Two Likely Disaster Causes Are Survivable. One Is Not

Chancellor Olaf Scholz’s government plans to buy 28,878 projectiles for the PzH 2000 self-propelled howitzer from a unit of Rheinmetall AG at a cost of €118.5 million ($130 million), according to a government document dated June 16 seen by Bloomberg.

The purchase, which lawmakers on the lower house of parliament’s budget committee are expected to approve this month, will be the first in a series of orders to replenish Germany’s stocks of the 155mm ammunition from about 20,000 units currently to around 230,000 by 2031.

The defense ministry in Berlin did not immediately respond to a request for comment.

Germany has been one of the most generous suppliers of military and other aid to the government in Kyiv, while at the same time pushing ahead with an effort to modernize the country’s armed forces after decades of neglect.

As well as 14 of the howitzers, Chancellor Olaf Scholz’s ruling coalition has sent Ukraine heavy materiel including Leopard battle tanks, Marder infantry fighting vehicles, IRIS-T and Patriot air-defense systems and Gepard anti-aircraft guns.

Speaking alongside NATO Secretary General Jens Stoltenberg on Monday in Berlin, Scholz said his government is “pushing German manufacturers to expand their capacity to produce and repair military equipment.” He also warned that the military alliance should be prepared for Russia’s war on Ukraine to last “for a long time.”

Rheinmetall has expanded ammunition production to ease supply bottlenecks by investing in an additional production line at its domestic site in Unterluess near Hamburg. The company will deliver the howitzer ammunition in three tranches: 9,100 in 2024, 12,000 in 2025 and 7,778 in 2026, according to the government document.

--With assistance from Arne Delfs.

Most Read from Bloomberg Businessweek

• Final Fantasy XVI Shows Off Square Enix’s Skill at Reinvention

• How Many People Does It Take for the Government to Send a Text?

• It’s Brutal to Get to the Ocean’s Depths. This Minisub Will Take You There

• When a Huawei Bid Turned Into a Hunt for a Corporate Mole

• Private Credit’s Quiet, Unstoppable Rise Comes With Unknown Risk

©2023 Bloomberg L.P.