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Rheinmetall has agreed to purchase a Mittelstand producer of propellants for ammunition, as Germany’s largest defence contractor races to strengthen its fragile gunpowder provide chain.
The arms maker stated on Monday stated it was set to accumulate Hagedorn-NC — a nitrocellulose producer based mostly in Lingen an der Ems that just some years in the past was on the point of insolvency — for an undisclosed sum.
“The acquisition helps us shut a strategic bottleneck in propellant manufacturing,” stated Rheinmetall chief government Armin Papperger, including that the deal would safe entry to “a key supply of uncooked supplies . . . in ammunition manufacturing”.
Since Russia’s invasion of Ukraine, European defence contractors have warned of an undersupply of nitrocellulose — an explosive propellant also referred to as “guncotton” that drives artillery munitions out of gun barrels — as Russia has been more and more sourcing substances from China.
China accounts for roughly half of the worldwide commerce of cotton linters, a byproduct and a main ingredient wanted to provide nitrocellulose.
Papperger instructed the Monetary Occasions final yr that Rheinmetall was reliant on China for “greater than 70 per cent” of its cotton linters, which introduced “a danger” for geopolitical causes.
Rheinmetall, which goals to ship 1mn rounds of Nato-standard 155mm ammunition to clients by the top of subsequent yr, at present produces nitrocellulose at three areas in Switzerland, Spain and South Africa.
The Düsseldorf-based firm — one of many uncommon inventory market winners from the battle in Europe — was on Monday hit by the looming tariff war unleashed by US President Donald Trump. Its share value fell by round 1 / 4 in morning buying and selling in Frankfurt, earlier than recovering barely to a 9 per cent decline.
Different German defence contractors suffered related losses, with tank gearbox maker Renk down 10 per cent in morning buying and selling and radar and sensor producer Hensoldt falling 11 per cent.
Hagedorn-NC, which employs 90 folks, was based in 1910 and has beforehand equipped predominantly civilian clients, akin to makers of coatings, inks, and lacquers. Apart from its use in gunpowder, nitrocellulose can be present in merchandise together with nail polish.
Rheinmetall stated on Monday that, pending antitrust approval, the Mittelstand firm would stop supplying its former civilian clients “within the coming months”, with manufacturing set to shift to military-grade nitrocellulose.
Gerd Hofmann, chief government of Hagedorn-NC’s guardian firm, stated he was “more than happy” with the deal, which he stated would provide the small chemical group “new views and progress alternatives”.
