The Germans chose Romania. What Rheinmetall's half a billion euro investment brings to the local defense industry

Rheinmetall's half a billion euro investment in the powder factory in Romania marks a crucial moment for the local defense industry, considered “the most important modernization initiative in recent history”, according to analyst Adrian Negrescu. The project not only brings capital and technology, but also opens the opportunity to transform Romania into an investment platform for sectors such as automotive, logistics, IT, agriculture, tobacco and chemistry, with the support of funds from the PNRR and the SAFE program.

Rheinmetall Victoria will produce 200 tons of powders

We remind you that the German giant Rheinmetall will invest half a billion euros in the powder factory in Romania, following the negotiations held by Prime Minister Ilie Bolojan and Minister of Economy Radu Miruță with the company's CEO Armin Papperger.

The agreement concerns the construction of a new powder factory, in the city of Victoria, Brașov County, which had a production capacity of approximately 60,000 charges, respectively 300,000 modular charges, which means one of the largest capacities in the world for artillery systems. 200 tons of powders will also be produced for local needs, especially for the 120 millimeter and medium calibers.

As for the value of the investment, it is around half a billion euros and will create around 700 new jobs. The construction of the factory starts in 2026, and the production here will be delivered in 2 years.

“Pthe Rheinmetall project is, without a doubt, the most important modernization initiative of the Romanian defense industry in recent historyah. The Germans chose Romania“, commented the analyst Adrian Negrescu.

“The good news is that, beyond the problems of today, we can get out of the zone of economic irrelevance with the help of the 10 billion euros from the PNRR that we have to spend in 2026 and the 17 billion euros from the SAFE program.

Romania can become an investment platform not only in the area of ​​the armaments industry but also in the logistics area, in the automotive sector, the IT industry, agriculture, in the tobacco industry and in the chemical industry. We must avoid “shaorma with everything” type projects and focus on industries that can export, that can bring profit and that generate horizontal economic chains.

We have funding, there is potential, it remains to be able to develop the necessary infrastructure, including fiscal – facilities for greenfield investors. It's a hopeless chance for Romania“, explained the analyst.

But how do we attract other investors? “Here is the big problem, given that the statistical data on newly created foreign investments show a collapse of the confidence of large companies in Romania. If 10 years ago they entered Romania approx. 3.5 billion euros annually, in 2024 we attracted foreign investments of only 600 million euros and 12 billion euros left the country. This is where the stable economic framework comes into play, especially the fiscal one, and the authorities' plans to stimulate greenfield investments, especially in the area of ​​industrial parks”. Negrescu declared for “Adevărul”.

“Investments must be stimulated”

The analyst added that Romania is losing heavily in terms of economic attractiveness and “if our politicians don't wake up and take measures to stimulate investment, we risk becoming irrelevant on the regional investment scene”.

“We need, first of all, the elimination of abnormal taxes on the turnover of large companies and the tax on special constructions (pillar tax), two fiscal instruments that drove away investors from Romania. We still need a fiscal framework nailed down for the next 4-5 years at least and fiscal and administrative facilities for those who have the courage to invest in our country.

Measures to limit investment bureaucracy, for faster approval of PUZs, fiscal facilities for the development of business chains, for production and job creation must be in the foreground. We also need a revitalization of ANOFM, an institution that should, as a matter of urgency, organize free training courses for the jobs required by the labor market”explained the analyst.

The agreement with Rheinmetall was renegotiated in favor of Romania

The Prime Minister and the Minister of Economy renegotiated every page of the agreement with Rheinmetall “in the interest of the Romanian state”.

Following the renegotiation, the Romanian state obtained additional advantages of over 93 million euros:

• ⁠half of 47 million euros – a European financing for the two partners (the Romanian state and Reihnmetall), which was previously considered only Reihnmetall's contribution and zero had been accepted for Romania;

• ⁠⁠the costs for the license which were 8%, were lowered to 6%;

• The rent that Romania received for the platform was 6 million and it went up to 9.

Miruță: The German producer, forced to source from Romania

“Additionally, but more difficult to measure in money, we have introduced the obligation of a local supply chain, for companies from Romania. The Romanian defense industry must be dismantled through such projects, and our economy must grow through investments horizontally, throughout the supply chain. And, extremely important – given that Romania has 49% in this association, for important aspects such as loans, sales, share transfers, Romania has the right of veto“, says the Minister of Economy, Digitalization, Entrepreneurship and Tourism, Radu Miruță.

He later explained that “we are in a situation where the German manufacturer will be forced to involve Romanian suppliers, this means an expansion of the economic zone not only in the area of ​​armaments, but also in the area of ​​metal processing, petrochemicals, fine mechanics, and there are companies from Romania that want to be suppliers for this new factory”.

At the same time, today at the Victoria Palace, discussions were held about cooperation within the SAFE program.

“Rheinmetall-Victoria SA will be, at this time, the most modern company in the world in the field of production of double and triple base powders. These powders are needed all over the world, especially in Europe, to support the defense forces – including in Romania,” said Rheinmetall CEO Armin Papperger.