According to the Bulgarian government, the planned factory is one of the largest investments into the country's defence industry, and will contribute to efforts by the EU and NATO to strengthen Europe's defence autonomy.
Under the contract signed by the Bulgarian government and Rheinmetall, Bulgaria's state-owned arms maker VMZ and the German firm agreed to construct a plant in the Bulgarian city of Sopot to produce gunpowder, 155-mm artillery shells and modular charge systems.
The two companies plan to invest more than one billion euros ($1.2 billion) into the construction of the facility, which is expected to be operational within 14 months.
"We will create 150,000 full-shot modular charges here in Bulgaria... and about 100,000 155mm-projectiles" per year at the site "for Bulgaria but also for export," said Rheinmetall chief Armin Papperger.
He highlighted the "huge needs" by Europe and NATO in the coming years.
"Rheinmetall will invest more and I'm sure that other European partners will come and will invest in Bulgaria," Papperger added.
The factory is expected to create around 1,000 jobs in the EU and NATO member country.
Bulgarian Prime Minister Rossen Jeliazkov hailed the project as a "a major step forward in the country's industrial and defence capabilities".
Bulgaria specialises in ammunition for Soviet-era weapons -- those most used by Ukraine -- though in recent years it has sought to modernise its ageing production facilities with European money to start churning out NATO-standard shells and other ammo.
Bulgaria's defence industry, which has boomed since Russia's invasion of Ukraine, contributes nearly four percent to the country's GDP, according to the government.
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