The new company, named Hexest AS, will be founded in the coming weeks and handed over to the Ministry of Defense within six months.

The plant will produce RDX-type explosives derived from oil shale, used in munitions, mines, and rocket warheads.

The factory will be built on the Defense Park in Pärnu County and is expected to start production in 2028.  

The government believes it could supply both Estonian and European ammunition manufacturers. 

"There is a shortage of military-grade explosives production capacity in Europe, so the creation of new production capacity is important to ensure supply security both for Estonian companies and for the region more broadly. The explosives factory will increase Estonia's attractiveness as a location for the defense industry," Minister of Defense Hanno Pevkur (Reform) said.

The initial costs will be approximately €7.2 million, which will cover preparatory activities and the engineering project. The final investment is expected to be between €120–130 million.

Pevkur has previously said that the annual production volume would be 600 tons of RDX explosives.

Estonia has a big oil shale industry in Ida-Viru County, and it is used to produce electricity and shale oil. Estonia ranks tenth in the world in terms of oil shale reserves, TalTech university says.

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