The Czech government is mulling the sale of the Explosia plant, known internationally for developing and producing plastic explosive Semtex, which was said to have been used in the 1988 bombing of the 103 PanAm flight that killed 270 passengers, crew and residents near the Scottish town of Lockerbie.

The plans were met with criticism by Czech defence and foreign policy experts who point out the country should not lose control over the strategically important plant, which is an important supplier to explosives and ammunition producers. Semtex is not among its main products.

“It would not happen that someone whose intentions conflict with the strategy of the Czech Republic would buy the company [Explosia],” Prime Minister Andrej Babiš was quoted as saying by Czech Press Agency on May 25, just days after he suggested that a French entity was interested in purchasing Explosia, referring to his talks with French President Emmanuel Macron.

“Then three companies called, these big companies, three big companies, which will have great interest in it,” Babiš added in his characteristically expressive way which earned him comparisons to US President Donald Trump.

Last week Babiš argued that Explosia does not generate significant income, while he also argued that its sale would enable his government to meet the Nato defence spending target.

He added that any sale would have to be “under extremely good conditions for the state” and preserve ties between Explosia and the Czech army.  

The plans mulled by Babiš were met with criticism from the opposition as well as the expert community.

Former minister of defence Jana Černochová of the opposition Civic Democratic Party (ODS) described the plans as “a denial of basic security logic” and Pavel Havlíček, analyst at the Prague-based Association for International Affairs (AMO), warned that it is not the right time to lose control over Explosia given Russia’s continued attacks on Ukraine and the deepening instability in the EU neighbourhood.

“Today Explosia is one of the key assets of the Czech state in the defence industry field,” Havlíček explained to IntelliNews, commenting on Explosia’s “significance and know how”, and that it would be “risky” to lose control of the company.

Regional defence and machinery conglomerate Czechoslovak Group (CSG) controlled by Michal Strnad has been long widely rumoured to be among the companies interested in purchasing Explosia, and CSG’s spokesperson Andrej Čírtek confirmed CSG’s interest in Explosia to Czech media following comments by Babiš last week.

CSG has been on a shopping spree in recent years and made a debut on January 23 on the Euronext bourse in Amsterdam, which became the “world’s largest defence IPO ever recorded both in terms of amount raised and market capitalisation,” according to Euronext.

Billionaire businessman-turned-politician Babiš has a storied relationship to Explosia himself as his food, chemical and agriculture conglomerate Agrofert took over Explosia during the later part of the Czech 1990s privatisation era, before the government bought it back on security grounds in 2002.

In 2014, while minister of finance, Babiš proposed to move Explosia under the Ministry of Industry to diminish the conflict of interests controversies stemming from his presence in the cabinet and ownership links to Agrofert.

“Babiš has a lengthy history with Explosia when he sold it in the early 2000s when he sold it to the state and lost a very significant trace in the domestic defence industry,” Havlíček commented to IntelliNews.

Havlíček also said that “it needs to be asked why and in what way the negotiations with the French side took place” and “what should the Czech state, or possibly Andrej Babiš, get out of it?” He added that “there is no reason to look for foreign buyer or investor unless there is something else behind it, particularly from Babiš towards France”. 

Babiš, who is fluent in French, nourished ties with Macron during his previous stint in power in 2017-2021 when his populist Ano party was part of the centrist Alde grouping in the European Parliament. Ano left the grouping in 2023, when it made a turn to national conservative waters and became one of the founding members of the Patriots for Europe radical rightwing grouping.  

Explosia was established in 1920 and in 2024 it increased its net profit to CZK442mn (€18.2mn), doubling it year-on-year, while revenue rose by a third to CZK1.8bn, online news outlet Novinky.cz noted.

Czechia struggled to meet the 2% Nato spending target last year and is not on course to meet it this year. The state budget defence total for this year amounts to CZK154.79bn, which is close to 1.8%, Czech Television reported last month following rows over defence spending in the newly reviewed budget, while overall defence-linked spending should be CZK185bn. Last year, defence spending amounted to CZK171.1bn.