Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Poland will boost its production of howitzer ammunition fivefold as the country seeks to reduce dependence on imported weaponry and protect itself from the Russian threat in the east, according to state assets minister Jakub Jaworowski.
In an interview with the Financial Times, Jaworowski said state-controlled defence group PGZ would “in the coming days” receive 2.4bn zlotys ($663mn) in government funds to increase the output of large-calibre ammunition and address one of Poland’s most pressing defence shortfalls.
The investment aims to increase the group’s annual output of 155mm artillery shells, which are used for Nato-standard howitzers, and 120mm shells for tanks.
Russia’s war in neighbouring Ukraine showed that “155mm ammunition plays a key role on the modern battlefield and is needed in large numbers”, Jaworowski said.
“Our goal in the short term is to significantly increase domestic production of this type of armament, as well as to become independent of foreign supplies and build a sustainable base for national autonomy. This is one of our priorities.”
PGZ currently produces about 30,000 large-calibre rounds per year and the funding is expected to increase that figure more than fivefold to between 150,000 and 180,000 annually within three years, with manufacturing kept within Poland to avoid reliance on imported components.
Poland is proportionally the largest defence spender in Nato, allocating the equivalent of 4.7 per cent of its GDP to the military in this year’s budget. However, much of this expenditure has so far been directed towards procurement from abroad, primarily the US and South Korea.
Prime Minister Donald Tusk’s government is now shifting focus to domestic manufacturing, in line with broader European efforts to reduce dependence on the US and other foreign military suppliers.
While some European defence companies, including Germany’s Rheinmetall, are already significantly increasing their ammunition output, Poland continues to face acute shortages and industry delays have drawn political scrutiny.
In April, Krzysztof Trofiniak abruptly resigned as PGZ chair after only a year, a move reportedly linked to concerns over stalled production. His resignation coincided with a stark warning from Dariusz Łukowski, head of Poland’s national security bureau, that current ammunition reserves would only sustain one to two weeks of combat in the event of a Russian attack.
The PGZ funding follows the Polish parliament’s approval in November of €700mn in public investment to bolster the country’s ammunition manufacturing capabilities.
Jaworowski said that Grupa Azoty, Poland’s largest chemical group, had also requested state money to expand into the ammunition sector by manufacturing key inputs such as propellants and nitrocellulose for explosives. Niewiadów, another domestic defence company, is also seeking government funding to make 155mm shells.
Jaworowski, who oversees a portfolio of about 110 state enterprises, said Azoty was among the companies in urgent need of restructuring.
He attributed its financial difficulties in part to what he described as poor and politically-motivated investment decisions made under the former Law and Justice (PiS) government, ousted in late 2023.
According to audits conducted since Tusk’s pro-EU coalition took power, state-owned companies had accumulated combined losses of up to €5bn because of mismanagement and fraud under PiS, Jaworowski said. His ministry has filed around 100 notices to the public prosecutor seeking criminal investigations.
In Azoty’s case, Jaworowski said the group’s survival depended on securing approval from its lenders for a restructuring plan, which could include increasing the state’s shareholding from 33 per cent to as much as 49 per cent. However, he said talks had been delayed by the European Investment Bank, one of Azoty’s creditors.
“I was expecting them [the EIB] to be the first to jump in on the opportunity and to propose a restructuring plan,” Jaworowski said. “My surprise was that they are not as eager as I would expect them to be, judging by their mandate as a development bank and given how supportive some of the fully commercial banks have been.”
But the EIB said that it was “actively engaged in efforts to put Grupa Azoty on a sustainable footing”. The Luxembourg-based bank added it had made “constructive proposals” but declined to elaborate, citing the company’s listed status and ongoing negotiations.
