Estonia planning €100 million oil shale explosives plant

The Ministry of Defense plans to build a factory in Estonia, valued at over €100 million, to produce explosives from oil shale. The facility would be partially funded by private investors, but the state would retain a controlling stake. The government approved a feasibility study for the project on Thursday.
"We have been discussing the possibility of establishing a defense industry park at the ministry for some time now. Activities are ongoing and the park's anchor tenant should be a large-caliber ammunition manufacturer. Looking at the current situation in Europe, it is clear that there is a critical shortage of explosives," Defense Minister Hanno Pevkur (Reform) said during the government press conference Thursday.
"Considering Estonia's own developments, particularly in the oil shale sector, we have a market advantage that we should capitalize on. This advantage lies in the ability to produce hexamine during the processing of oil shale, which is an essential ingredient for the explosive RDX," Pevkur added.
"To produce this explosive, we can leverage our competitive edge by manufacturing it from oil shale. Therefore, my proposal to the government today was to establish an explosives factory in Estonia," Pevkur explained.
The Ministry of Defense plans to first conduct a feasibility study. "No one makes major investment decisions without a feasibility study. The construction of the explosives factory will cost over €100 million," Pevkur said.
The state will retain at least a majority stake in the enterprise. "We certainly do not wish to establish this as a state-owned company, but given the strategic nature of explosives, we want to keep a controlling stake in state hands while involving private investors. Whether the private investor will be the same ammunition manufacturer or someone else remains to be seen," Pevkur noted.
"Our goal today was to obtain the government's principled approval to move forward with this project. We received that approval. Next, we will continue working with the Ministry of Finance to quickly identify funding sources for the feasibility study and proceed according to our proposed timeline," Pevkur added.
"This project would serve multiple purposes. First, it would add value to oil shale. Second, it would reduce the critical shortage in the arms industry, particularly of explosives. Third, it would naturally boost the state budget, provide jobs and enhance both our national defense capabilities and the defense industry," the defense minister concluded.
According to Pevkur, Eesti Energia's subsidiary Enefit Power would be involved in the production of explosives. "They are already planning various investments to shift from simply burning oil shale to adding more value to it," Pevkur noted.
Explosives shortage in Europe
Arms industry expert and head of Eesti Arsenal Jens Haug said that following Russia's full-scale invasion of Ukraine, there is a shortage of explosives in Europe. However, the feasibility of establishing an explosives factory in Estonia also depends on the production costs.
"After the Cold War, a large number of explosives factories in Europe were dismantled and scrapped. Now, that decision is deeply regretted. Additionally, since the onset of the full-scale war in Ukraine, all remaining factories are operating at full capacity. Their national orders are booked years in advance," Haug explained.
"In this context, such a factory would definitely be relevant for Estonia's production needs. Estonia could certainly utilize this explosive," he added.
Haug noted that even if the production costs of explosives in Estonia were higher than global market prices, the factory could still be attractive to regional ammunition manufacturers because transporting explosives is complicated. "Quick availability and realistic planning are certainly more important than a 10-20 percent price difference," Haug emphasized.
Furthermore, lower prices elsewhere in the world might not translate into reduced costs in the end. "Often, the price at a factory in Asia may seem very reasonable. But after factoring in all the regulations, requirements and restrictions necessary to deliver explosives to storage facilities in Estonia, the final cost can be something entirely different," Haug said.
According to Haug, an explosives factory in Estonia would offer a competitive advantage to all regional ammunition manufacturers. "This would be a competitive edge for everyone in the neighboring friendly countries — Latvia, Lithuania, Finland and Sweden," he said.
--
Follow ERR News on Facebook and Twitter and never miss an update!
Editor: Huko Aaspõllu, Marcus Turovski