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
00:48useful? 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 the
01:50UK, 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
02:22of the world. Europe only has one TNT manufacturer today, located in Poland, named nitrogen, controlled by
02:28the Polish 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 Rhein-Mathalt,
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
03:10UK was producing vaccine, but they were applying an export ban to it. If something would happen in
03:16Poland, 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 will be a conflict, well, in their proximity, there will be an export
03:26ban to it. On top of that, in order to transport explosives from Asia, you need to go around the
03:32Horn of Africa because the Suez Channel is closed due to the conflict in Germany and the boats being
03:36attacked. So the lead time is more than two months if the ship even reaches your ports. On top of that,
03:42you have the political 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
03:59you 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, 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. Now we know that there's a big push in Europe right
04:26now to ramp up investment in defense. We have the Rearm Europe plan, which could release as much as 800
04:33billion euros by 2030. How do you see Sweden ballistics contributing to this plan? And are you confident
04:40that all of these 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
04:51from now. 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 that
05:02puzzle. The industry is asked to take huge commercial and financial risk to ramp up production,
05:09while the actual procurement orders from the armed forces in 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 not high
05:37on my agenda. Some would say, well, this big portion in investment in the defense sector is going to
05:45benefit big corporations and entrepreneurs like yourself. But do you think also that the benefits
05:50can spill over to the local economy? Will it create more jobs and so on? 100%. So I'm gonna take this
05:57number with a pinch of salt, but I read the number that the European member states are spending 200 billion
06:02euros every year on defense material. More than 60% of that is purchased from American producers.
06:07If those components were to be manufactured in the EU, we would create more than 10 million jobs.
06:12So there is a real measurable opportunity, which 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 NATO's
06:25resilience 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,
06:46and is the most successful preventive defensive alliance in the history of the world. So no
06:52NATO country has been invaded since its creation. So the likelihood of these ornaments actually being
06:58used, I would say, is quite small. And that's the whole purpose. So the risk of going into a conflict
07:03is higher if you have a difference in the production capacity with your aggressor. Another reason why I'm
07:09doing this is if you look at the global crises, environment, climate, starvation, none of them will be
07:16dissolved in a state of war. So the fundamentals to addressing climate is to make sure there is no
07:21war. Because if there is a war, there will be no resources allocated to solve the big problems.
07:26So I see this as kind of a step zero. This needs to be stable to solve the big problems. But my ambition
07:33is to repurpose any cash flow that this business generates into further strengthening our resilience
07:38and preventing the conflict. So as long as we have a world where there is a conflict in our proximity,
07:43I would like to make sure that it stays in our proximity and not at home.
07:46Great. Well, Jochen, thank you so much for joining us on The Big Question.
07:49Thank you for having me.
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