Bulgaria signed a landmark agreement with Germany’s Rheinmetall on October 28 to build a gunpowder and 155-millimetre ammunition plant in central Bulgaria, in one of the country’s biggest industrial investments in recent years.

The move reflects Bulgaria’s growing role in Europe’s rearmament drive and Nato’s efforts to strengthen regional defence supply chains and cut reliance on external suppliers.

The deal, worth approximately €1bn, was signed at the Council of Ministers in Sofia between state-owned arms producer VMZ-Sopot and Rheinmetall, one of Europe’s leading defence manufacturers.

The new facility will be built within the VMZ industrial complex in Sopot and is expected to become operational within two years, creating around 1,000 skilled jobs, the government said.

“This agreement is a huge step forward in Bulgaria’s industrial and defence capabilities,” Prime Minister Dimitar Glavchev said at the signing ceremony, according to state news agency BTA.

Officials said the project will help restore a key part of Bulgaria’s defence production base, strengthen its military capacity and deepen its integration into Europe’s defence supply network.

Rheinmetall announced in August that it planned to invest more than €1.5bn in new ammunition facilities in Bulgaria and Romania as part of a wider European push to boost arms production amid Russia’s war in Ukraine.

Europe’s defence industry has surged since Russia’s full-scale invasion of Ukraine in 2022, with shares of leading weapons producers climbing sharply. Rheinmetall reported record operating profits of nearly €1.5bn in 2024, up 61% from the previous year.