The factory will focus on producing 155 mm artillery ammunition, with production expected to begin in 2028. The project is also expected to create up to 1,000 jobs in the region.
Estonian Minister of Defence Hanno Pevkur said: “With the establishment of large-calibre ammunition production, Estonia is taking an important step in developing its defence capabilities and ammunition industry.” He added: “ARCA is a rapidly expanding defence company that has in recent years developed a significant ammunition production hub in Turkey.”
He said the Estonian subsidiary will build the factory in North Kiviõli. “ARCA Baltics Operations, established in Estonia, will build a factory in North Kiviõli where the primary focus will be on producing large-calibre 155 mm ammunition, including extended-range variants,” he said.
The minister noted that the agreement includes procurement options for the state. “Under the agreement, the Estonian state will also have the option to procure ammunition from this major producer if needed,” he said.
He added that the investment will support the national economy. “In addition, the agreement signed today brings an investment of hundreds of millions of euros into the Estonian economy and creates hundreds of new jobs,” he said.
The facility will also produce mortar ammunition of various calibres and 122 mm rockets. The company will build production infrastructure, including equipment and storage facilities, as part of the investment.
ARCA Baltics Operations is affiliated with the Turkish group ARCA Defense. The parent company operates nine factories, employs around 5,000 people and recorded export volumes exceeding €3 billion last year.
Under the agreement, the Estonian state will provide a 141-hectare site in the North Kiviõli defence industry park. The government will also invest up to €10 million in infrastructure, including roads, fencing and utility connections.
Tambet Tõnisson, Head of State Assets at the Estonian Centre for Defence Investments, said: “ARCA has successfully established a significant large-calibre ammunition production capability in Turkey, and their recent experience in building ammunition factories, along with their market knowledge, is a major advantage.” He added: “The company’s development plan and land requirements are well aligned and fit effectively within the Kiviõli defence industry park.”
The parties are working to ensure that production begins in 2028. The formal signing ceremony is expected to take place in early May during the SAHA Expo 2026 in Turkey.
The project forms part of a broader effort to develop defence industry parks in Estonia. Additional sites are being prepared, with several companies already selected to establish production facilities in other locations.
