The German armaments company Rheinmetall has signed a contract with the Ukrainian state-owned company Ukroboronprom to establish a joint venture. Initially, it is planned to maintain and repair armored vehicles in Ukraine, but in the long term, tanks are also to be built in Ukraine.

Jonas Jansen

Business correspondent in Dusseldorf.

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The step, which was first reported by the "Handelsblatt", was confirmed by Rheinmetall on Friday. The Dax group is to hold 51 percent of the company and provide the majority of the management. Rheinmetall CEO Armin Papperger had announced some time ago that he wanted to build a tank factory in Ukraine, provided that the armaments company was approved. Papperger had met with representatives of the Ukrainian arms industry, for example, at the Munich Security Conference, and recently the CEO was also in Ukraine.

The companies expect the necessary approvals from the authorities in the next few weeks, and the joint venture is expected to exist from July. "It is a central concern of ours at Rheinmetall to support our Ukrainian partners in the fight for freedom and democracy and to meet their urgent needs as quickly as possible," Papperger was quoted as saying in a company statement on Friday.

Increase in production despite Russian attacks

The state-owned company Ukroboronprom is currently being restructured in the war economy in such a way that it is to become the spearhead of the Ukrainian defense industry, most recently the company signed a contract with a Polish arms company for the supply of tank ammunition. "We are already working around the clock for victory – despite numerous Russian missile strikes, Ukroboronprom was still able to increase the production of military equipment and armored vehicles," said Yuriy Husyev, the general director of the state-owned corporation Ukroboronprom. "Together with Rheinmetall at our side, we will be able to achieve even more for our country."

According to Papperger's idea, the production of new military vehicles should also begin as soon as possible. However, it is still unclear whether in an existing plant or in a new building. The first wheeled tanks are to be produced within a year, which would of course be delayed if a new factory were built. In the coming days, further contracts for cooperation for ammunition and air defense are to be signed.