UK Ministry of Defence Identifies Potential Sites for Domestic Explosives and Ammunition Manufacturing

UK Ministry of Defence Identifies Potential Sites for Domestic Explosives and Ammunition Manufacturing

The UK Ministry of Defence has identified over a dozen disused industrial sites, including former oil refineries and chemical plants, as potential locations for new explosives and ammunition factories. This initiative is part of a planned multibillion-pound investment to enhance the UK's sovereign manufacturing capabilities and address munitions shortages highlighted by the war in Ukraine.

Context & What Changed

The United Kingdom's decision to identify sites for a new generation of munitions factories represents a fundamental reversal of a decades-long trend in Western defence policy. Following the end of the Cold War, the UK, along with most NATO allies, significantly reduced its defence industrial base as part of a 'peace dividend'. This involved the consolidation of production, closure of facilities, and a shift towards leaner, 'just-in-time' supply chains that relied heavily on international partners and a diminished need for large-scale conventional warfare stockpiles. The UK's ordnance and explosives manufacturing capability, once a sprawling network, contracted to a few key sites, with BAE Systems operating as the primary onshore provider for the Ministry of Defence (MoD).

The high-intensity conventional war in Ukraine has served as a powerful catalyst, exposing the critical vulnerabilities of this model. The conflict's rate of artillery ammunition consumption has dwarfed Western production capacity. At certain points, Ukrainian forces were expending 6,000-8,000 155mm shells per day, a rate that far outstripped the combined monthly production of the United States and Europe at the time (source: CSIS). This has led to a rapid depletion of national stockpiles in donor countries, including the UK, which has been a leading supplier of military aid to Ukraine. A 2023 report from the Royal United Services Institute (RUSI) highlighted that the UK's ammunition stocks were 'dangerously low' and that rebuilding them would take years at current production rates (source: rusi.org).

What has changed is the formal transition from strategic recognition of the problem to tangible, location-specific planning. The MoD's identification of over a dozen potential brownfield sites marks a critical step towards implementation. This is no longer a theoretical discussion about industrial strategy but a concrete move to re-shore and expand the entire munitions value chain—from precursor chemicals and explosives to shell casings and final assembly. The initiative signifies a paradigm shift from 'just-in-time' to 'just-in-case' industrial readiness, acknowledging that strategic autonomy in an era of renewed great-power competition requires a robust and resilient domestic manufacturing base. The planned 'multibillion-pound investment' underscores the scale of this policy reversal and its significance for UK public finance and national security infrastructure.

Stakeholders

UK Government: The Ministry of Defence (MoD) is the primary stakeholder, acting as the client and strategic director. The Defence Equipment and Support (DE&S) agency will manage procurement and project delivery. His Majesty's Treasury (HMT) is a critical gatekeeper for the 'multibillion-pound' funding. The Department for Business and Trade (DBT) will be involved in shaping the industrial strategy and attracting investment, while the Department for Levelling Up, Housing and Communities (DLUHC) will oversee the planning process. The Health and Safety Executive (HSE) and Environment Agency will be key regulators, given the nature of the facilities.

Defence Industry (Large-Cap Actors): BAE Systems, as the UK's incumbent sovereign munitions provider, is a central stakeholder. The company recently received a £1.9 billion contract to ramp up 155mm shell production at its existing sites (source: BAE Systems). European defence giants like Rheinmetall (which co-owns the RBSL land systems venture with BAE) and KNDS are also key players, likely to be involved as partners or prime contractors. The initiative creates opportunities for both incumbents and potential new entrants to the UK market.

Infrastructure & Engineering Sector: A wide range of firms will be essential for delivery. This includes environmental consultancies for site assessment and remediation, civil engineering firms like Balfour Beatty or Kier Group for site preparation and construction, and specialized engineering firms like Jacobs or AtkinsRéalis for designing and commissioning complex chemical and manufacturing plants.

Investors & Public Finance: The funding model is a key variable. The investment could be entirely from the public purse, impacting UK public debt and borrowing. Alternatively, the government may seek public-private partnerships (PPPs) or other private finance initiatives to share risk and cost, creating opportunities for infrastructure funds and institutional investors. The certainty of long-term government contracts will be crucial for attracting private capital.

Local Authorities & Communities: The local councils governing the selected sites will be responsible for planning permissions and will be key stakeholders in managing local economic benefits (jobs) versus potential drawbacks (safety concerns, environmental impact). Community engagement will be critical to mitigate NIMBY ('Not In My Back Yard') opposition.

NATO Allies & Partners: The UK's initiative will be viewed positively within the alliance as a significant contribution to NATO's overall defence production capacity and resilience. It aligns with broader NATO and EU efforts to ramp up munitions manufacturing, such as the EU's Act in Support of Ammunition Production (ASAP) (source: ec.europa.eu). This could lead to joint procurement programs and enhanced interoperability.

Evidence & Data

The strategic rationale is supported by stark quantitative realities. The UK government has committed to increasing defence spending to 2.5% of GDP 'as soon as fiscal conditions allow' (source: gov.uk). This provides the top-level financial context for the investment. The core driver is the production deficit. Before the 2022 invasion of Ukraine, total European production capacity for 155mm shells was estimated at around 300,000 rounds per year (source: Financial Times). The current conflict consumes that amount in less than two months. In response, the UK has taken initial steps, such as BAE Systems' plan to increase its 155mm shell production eightfold, but this relies on existing facilities with inherent bottlenecks.

The critical vulnerability lies in the supply of precursor materials. Modern munitions depend on explosives like RDX and TNT, and propellants based on nitrocellulose. The production of these foundational materials has been heavily outsourced and consolidated globally. The identification of 'former oil refineries and chemical plants' as potential sites is deliberate; these locations often have legacy infrastructure (e.g., rail links, utilities), appropriate zoning for heavy industry, and buffer zones that are essential for explosives manufacturing. However, they also present significant remediation challenges and costs.

The scale of the program—'over a dozen sites' and a 'multibillion-pound' price tag—indicates a national-level effort. For comparison, Rheinmetall's new munitions plant in Lower Saxony, Germany, is projected to cost €300 million and produce 200,000 artillery shells annually (source: Rheinmetall AG). Extrapolating from this, a UK program involving multiple sites covering the full production chain from chemical precursors to final assembly could plausibly require an investment in the range of £2 billion to £5 billion over the next decade. This represents a substantial new capital expenditure program for the UK government.

Scenarios (3) with probabilities

Scenario 1: Full-Scale Sovereign Ramp-Up (Probability: 60%)

Description: The UK government successfully allocates funding and maintains political will for the program. Contracts are awarded to a mix of incumbent firms (BAE Systems) and international partners (e.g., Rheinmetall), leading to the development of 3-5 new, state-of-the-art facilities over the next 5-7 years. The program successfully re-shores critical capabilities in explosives and propellant manufacturing, significantly increasing the UK's strategic stockpile and production surge capacity. The initiative is hailed as a success for UK industrial strategy and national security.

Rationale: The persistence of the threat from Russia and the broad cross-party consensus on the need for defence industrial resilience provide strong political tailwinds. The economic benefits, including high-skilled jobs in 'levelling up' regions, make the program politically attractive.

Scenario 2: Limited, Partnership-Focused Execution (Probability: 30%)

Description: Persistent fiscal pressures and/or significant delays from planning and environmental hurdles lead to a down-scoping of the program. Only one or two flagship sites are fully developed. To manage costs and access technology, the UK leans more heavily on joint ventures with European allies, potentially integrating its supply chain more deeply with EU initiatives rather than achieving full sovereignty. Production targets are met, but with greater reliance on international partners than initially envisaged.

Rationale: The UK's public finances remain constrained, and a future government may face difficult trade-offs between defence capital projects and other priorities like healthcare or social spending. Complex brownfield remediation and local opposition could inflate costs and timelines, forcing a strategic retrenchment.

Scenario 3: Program Stalls or is Significantly Curtailed (Probability: 10%)

Description: The initiative loses political momentum. A significant de-escalation in European security tensions, combined with a severe domestic economic crisis, leads to the program being indefinitely postponed or cancelled after the initial study phase. Only minimal upgrades to existing facilities proceed. The strategic vulnerability remains largely unaddressed.

Rationale: This is a low-probability scenario given the current geopolitical climate. However, a confluence of a major global peace breakthrough and a deep recession could shift political priorities away from long-term, high-cost defence projects.

Timelines

Short-term (0-18 months): Final site selections are made from the longlist. Detailed feasibility studies, environmental impact assessments, and geotechnical surveys are conducted. The MoD finalizes its procurement strategy and initiates the formal competition or negotiation with industrial partners. Initial funding tranches are allocated in the government's Autumn Statement or Spring Budget.

Medium-term (18 months – 5 years): Planning applications are submitted and, potentially, fast-tracked under Critical National Infrastructure rules. Site remediation and construction of core facilities and infrastructure begins. Long-lead items (specialized machinery) are ordered. The first new production lines for key components (e.g., explosive fills) are commissioned towards the end of this period.

Long-term (5-10 years): The new facilities achieve Full Operational Capability (FOC). Production is ramped up to meet the MoD's stockpile replenishment targets. The program transitions from a capital project to a sustained operational and maintenance phase, providing a baseline of munitions production for the UK armed forces for the next 20-30 years.

Quantified Ranges

Total Investment: The 'multibillion-pound' figure suggests a range of £2 billion to £5 billion over a 10-year capital expenditure cycle. This would cover site acquisition/remediation, design, construction, plant machinery, and commissioning.

Production Output: The objective will be to create a surge capacity many multiples of the current rate. For 155mm shells, this could mean an onshore capacity target of 200,000-500,000 rounds per year, moving the UK from a minor to a significant European producer.

Employment: The construction phase could generate 2,000-4,000 temporary jobs. The operational phase would create an estimated 1,000-2,500 permanent, high-skilled jobs in manufacturing, engineering, and chemical processing, likely concentrated in post-industrial regions.

Risks & Mitigations

Fiscal & Procurement Risk: The primary risk is significant cost overruns, a common feature of large defence projects.

Mitigation: Implement a phased approach with clear off-ramps. Utilize firm fixed-price contracts where possible and establish a joint program office with industry partners to foster transparency and manage costs proactively. Explore off-balance-sheet financing models for certain infrastructure elements.

Planning & Regulatory Risk: Delays from local opposition, environmental permitting for contaminated land, and stringent safety licensing under COMAH (Control of Major Accident Hazards) regulations.

Mitigation: Early and transparent engagement with local communities, regulators, and planning authorities. Designating the sites as Critical National Infrastructure can streamline the planning approval process. Build best-in-class environmental and safety features into the design from the outset.

Supply Chain & Skills Risk: Even with domestic factories, the UK may still rely on a global supply chain for certain raw materials (e.g., specific chemicals, rare earth elements) and specialized tooling. A critical shortage of qualified chemical engineers, ordnance technicians, and systems integrators could hamper progress.

Mitigation: Conduct a full supply chain audit to identify and mitigate dependencies. Develop a national defence industrial skills strategy, including funding for university programs, apprenticeships, and vocational training in partnership with industry.

Sector/Region Impacts

Defence & Aerospace: This program will provide a generational anchor for the UK's land systems and munitions sector, guaranteeing domestic order flow for decades and enhancing credibility for export campaigns.

Construction & Engineering: Represents a major pipeline of high-value, complex industrial projects, rewarding firms with expertise in brownfield remediation, secure facilities, and process engineering.

Chemicals Industry: A potential catalyst for reviving parts of the UK's domestic industrial chemical production, particularly for dual-use materials like nitrocellulose and nitric acid.

Regional Impact: The focus on disused industrial sites means investment is likely to flow to post-industrial areas in the North of England, Scotland, or Wales, directly supporting the UK's 'levelling up' agenda with long-term, high-quality employment.

Recommendations & Outlook

For Government: The MoD and HMT must provide a long-term, ring-fenced funding commitment to give industry the confidence to invest in skills and capacity. The Cabinet Office should designate the program as a Tier 1 government priority, ensuring cross-departmental support to overcome regulatory and planning hurdles. A dedicated skills initiative is paramount and should be launched immediately.

For Industry & Investors: Prime contractors should form strategic consortia, bringing together defence, construction, and chemical expertise. Infrastructure investors should analyze opportunities for private finance in non-core elements like utilities and site infrastructure, contingent on robust government offtake agreements. Proactive investment in modern, digitally-enabled, and environmentally compliant production technologies will be a key differentiator.

Outlook: The strategic logic underpinning this initiative is robust and addresses a critical national security failing exposed by the war in Ukraine. (scenario-based assumption). While execution risks related to cost, schedule, and regulation are significant, the political will to proceed appears strong and is likely to endure a change in government. (scenario-based assumption). The success of this program will not only determine the resilience of the UK's defence posture but will also serve as a crucial test case for the nation's ability to execute complex, long-term industrial strategy in the 21st century. (scenario-based assumption).