The Ministry of Defense plans to build a factory in Estonia, valued at over €100 million, to produce explosives from oil shale. The facility would be partially funded by private investors, but the state would retain a controlling stake. The government approved a feasibility study for the project on Thursday.

“We have been discussing the possibility of establishing a defense industry park at the ministry for some time now. Activities are ongoing and the park’s anchor tenant should be a large-caliber ammunition manufacturer. Looking at the current situation in Europe, it is clear that there is a critical shortage of explosives,” Defense Minister Hanno Pevkur (Reform) said during the government press conference Thursday.

“Considering Estonia’s own developments, particularly in the oil shale sector, we have a market advantage that we should capitalize on. This advantage lies in the ability to produce hexamine during the processing of oil shale, which is an essential ingredient for the explosive RDX,” Pevkur added.

“To produce this explosive, we can leverage our competitive edge by manufacturing it from oil shale. Therefore, my proposal to the government today was to establish an explosives factory in Estonia,” Pevkur explained.

The Ministry of Defense plans to first conduct a feasibility study. “No one makes major investment decisions without a feasibility study. The construction of the explosives factory will cost over €100 million,” Pevkur said.

The state will retain at least a majority stake in the enterprise. “We certainly do not wish to establish this as a state-owned company, but given the strategic nature of explosives, we want to keep a controlling stake in state hands while involving private investors. Whether the private investor will be the same ammunition manufacturer or someone else remains to be seen,” Pevkur noted.

“Our goal today was to obtain the government’s principled approval to move forward with this project. We received that approval. Next, we will continue working with the Ministry of Finance to quickly identify funding sources for the feasibility study and proceed according to our proposed timeline,” Pevkur added.

“This project would serve multiple purposes. First, it would add value to oil shale. Second, it would reduce the critical shortage in the arms industry, particularly of explosives. Third, it would naturally boost the state budget, provide jobs and enhance both our national defense capabilities and the defense industry,” the defense minister concluded.

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