00:00Europe only has one TNT manufacturer today. The price we pay, if we don't do it,
00:03it's going to be even higher. None of them will be sold in the state of war.
00:12Welcome to The Big Question, the show from Euronews where we address some of the biggest
00:17issues on the business agenda. My guest on today's program is Joachim Sjöblom,
00:23the CEO and co-founder of Sweden Ballistics, a new Swedish manufacturer of explosives.
00:31Joachim, thank you so much for joining us. Thank you for having me. First, your company
00:34is planning to set up a manufacturing plant for the explosive TNT in Sweden. So for those of
00:42our viewers who might not be so familiar with it, can you first remind us what TNT is and what it's
00:48used from? Absolutely. So TNT is one of the oldest explosives used for military purposes.
00:54Trinitro toluene has several benefits to it. It's relatively unsensitive and safe to handle.
01:00The raw materials are easily available, which is essential for this production because the
01:05big purpose of why we're doing this is our local resilience and supply chains.
01:09Now we know that explosives, including TNT, are in shortage in Europe. Europe essentially is not
01:21producing enough. What role can Sweden Ballistics play in plugging that production gap in Europe,
01:28do you think? So the numbers that are easy to refer to is a public study that was presented by a British
01:34Research Institute back in March 2005. And they stated that Russia can make available 5 million
01:40artillery shells per annum. 3.5 is newly produced and roughly 1.5 is from either stockpiles or donations
01:46from the Russian allies. The same article presented that the European production capacity, including
01:50the UK, but excluding the US, is 720,000 shells. So you have a 6x difference on Russian capacity versus
01:58European capacity. And the whole NATO philosophy of deterrence is to make sure that both parties have
02:03somewhat equal strengths to prevent the other from attacking the other. And, well, time will tell,
02:08if this delta continues growing, the risk of the conflict will increase unless we can be on par.
02:13Give us a sense right now of how reliant Europe is on TNT and explosives produced in other parts of the
02:22world. Europe only has one TNT manufacturer today, located in Poland, named Nitrogen, controlled by the
02:28Polish state. And they're doing a great job, but they produce far from enough capacity. So if you go
02:32one step up in the ammunition production chain, you have a lot of manufacturers of ammunition.
02:37So you've got BAE in the UK, you've got Nexter and KNDS in France, you've got Ryan, Mattel,
02:43Namu, etc. All of these are reliant on explosives, but barely none of them produce their own explosive.
02:49So during time of peace, they could rely on Poland to supply them. Now they cannot. And so the vast
02:54majority of TNT currently used in Europe is coming outside of NATO countries, in many cases,
02:59as far as Asia. What kind of risks does that carry, in your opinion, that there is a reliance on
03:04producers outside of Europe? Countless. So only if we go back to the COVID pandemic, we saw that the
03:11UK was producing vaccine, but they were applying an export ban to it. If something would happen in
03:17Poland, I am very certain there would be an export ban on TNT. Same goes for the Asian country that is
03:22currently exporting. If there'll be a conflict, well, in their proximity, there will be an export ban to it.
03:27On top of that, in order to transport explosives from Asia, you need to go around the Horn of Africa
03:33because the Suez Channel is closed due to the conflict in Germany and the boats being attacked.
03:37So the lead time is more than two months, if the ship even reaches your ports. On top of that, you have the
03:43political risk and you have uncertain agendas from the countries that you're buying from.
03:47And you specifically, you're, I understand, hoping to be at full production capacity by around 2027.
03:54Give us a sense of what your production capacity could be as Sweden ballistics and how much of a role
03:58you can play in kind of ramping up the amount of explosives that Europe actually produces.
04:04So our environmental permit is for 4,500 metric tons and one artillery shell holds roughly 10 kilograms
04:11per shell. So easily calculated, roughly 400,000, 450,000 shells. It's far from matching the Russian
04:17capacity. We will need 10 of these manufacturing plants to be on par with 5 million shells coming
04:21out of Russia, but it's a major contribution.
04:23Now, we know that there's a big push in Europe right now to ramp up investment in defense.
04:29We have the Rearm Europe plan, which could release as much as 800 billion euros by 2030.
04:35How do you see Sweden ballistics contributing to this plan? And are you confident that all of
04:41these will work and can actually undo decades of underinvestment in this sector?
04:47Well, ready is very hard to define because nobody knows what the world will look like five years from
04:51now. In terms of the safe funding, it already has a requirement that 65% of the cost of components
04:57should be manufactured within Europe. In order to have EU manufactured components, we play a part in
05:02that puzzle. The industry is asked to take huge commercial and financial risk to ramp up production,
05:08while the actual procurement orders from the armed forces and the member states are not coming in as
05:14fast. So I think the risk profile is suboptimal right now. The industry needs to carry a lot of
05:20risk, which is a benefit as a new player in the industry, because we don't have the same shareholders
05:25to care for, cater for, and we don't have the same stock price that we consider on a quarterly basis.
05:31My job here is to make sure that we prevent the future conflict and making short-term profit is
05:37not high on my agenda. Some would say, well, this big portion in investment in the defense sector is
05:44going to benefit big corporations and entrepreneurs like yourself. But do you think also that the
05:50benefits can spill over to the local economy? Will it create more jobs and so on?
05:55100%. So I'm going to take this number with a pinch of salt, but I read a number that the European
06:00member states are spending 200 billion euros every year on defense material. More than 60% of that is
06:05purchased from American producers. If those components were to be manufactured in the EU,
06:10we would create more than 10 million jobs. So there is a real measurable opportunity,
06:15which also comes with the benefit of our improved security.
06:18You say on the website of Sweden Ballistics that the company is dedicated to strengthening
06:24NATO's resilience and preventing military conflicts through the production of defensive capabilities,
06:30which is something you've explained to us. Some would argue that the idea of an explosives factory
06:36is not compatible with the idea of preventing conflicts. How do you see it?
06:41I think we can look at the results of history. So NATO is, what, 75 years old now? And it's the most
06:47successful preventive defensive alliance in the history of the world. So no NATO country has been
06:53invaded since its creation. So the likelihood of these ornaments actually being used, I would say,
06:59is quite small. And that's the whole purpose. So the risk of going into a conflict is higher if you
07:05have a difference in the production capacity with your aggressor. Another reason why I'm doing this is,
07:10if you look at the global crises, environment, climate, starvation, none of them will be solved
07:16in a state of war. So the fundamentals to addressing climate is to make sure there is no war. Because
07:22if there is a war, there will be no resources allocated to solve the big problems. So I see this
07:27as kind of a step zero. This needs to be stable to solve the big problem. But my ambition is to repurpose
07:34any cash flow that this business generates into further strengthening our resilience and preventing the
07:39conflict. So as long as we have a world where there is a conflict in our proximity, I would like to
07:43make sure that it stays in our proximity and not at home. Great. Well, Jochen, thank you so much
07:48for joining us on The Big Question. Thank you for having me.
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