Bulgaria and the German defense giant Rheinmetall have finalized a strategic agreement for the construction of a modern plant that will produce gunpowder and 155-mm NATO-standard artillery shells on Bulgarian territory. The project, valued at nearly 1 billion leva (500,000 euros), will be developed as a joint venture located within the facilities of Bulgaria’s largest state-owned defense enterprise, the Vazov Machine-Building Plants (VMZ) in Sopot.

The official signing ceremony will take place in the presence of Prime Minister Rosen Zhelyazkov. Rheinmetall’s CEO Armin Papperger and VMZ-Sopot’s executive director Ivan Getsov will formally sign the contract. According to the agreement, the German company will hold a 51 percent share in the joint venture, while Bulgaria will finance its participation through a loan of more than 400 million euros under the European SAFE mechanism.

The new plant will be equipped with next-generation technology and is expected to become operational within two years. The investment will also create close to a thousand high-skilled jobs, marking one of the largest and fastest-negotiated industrial projects in Bulgaria in recent years.

Beyond its national significance, the initiative is seen as part of the broader European and NATO strategy to enhance defense production, strengthen supply chains, and build greater strategic autonomy amid ongoing global security challenges.

The project was first announced in August by Rheinmetall’s Armin Papperger. Its rapid implementation has been a subject of public discussion, with both President Rumen Radev and GERB leader Boyko Borissov claiming credit for facilitating the deal. The European Commission President Ursula von der Leyen also visited VMZ-Sopot earlier this year, underscoring the EU’s support for boosting Europe’s defense capacity.

The government emphasized that this investment not only reinforces Bulgaria’s defense capabilities but also positions the country as a key player in the European defense industry. The new facility will restore a vital part of Bulgaria’s military production base and contribute to the modernization and competitiveness of its arms sector.