Slovak ammunition manufacturer ZVS Holding has signed a seven-year framework agreement with the Ministry of Defence of the Slovak Republic to supply large- and medium-calibre ammunition to EU member states, with a potential value of up to €58 billion.

The deal is designed to plug European shortages in key munitions and is expected to be financed largely through the European Union’s new Security Action for Europe (SAFE) defence loans instrument.

Under the agreement, ZVS Holding will supply 155 mm artillery rounds, 120 mm tank ammunition and 30 mm and 35 mm cannon ammunition for Slovakia and other EU countries that choose to join the scheme on a government-to-government basis. The company, based in Dubnica nad Váhom, is jointly owned by the Slovak state and Czech defence conglomerate Czechoslovak Group (CSG), each holding 50%.

According to CSG and the Slovak defence ministry, the €58 billion figure represents the maximum potential volume of deliveries over seven years, calculated on the basis of available production capacity rather than firm orders. Bratislava is positioning the arrangement as the core of a “Slovak ammunition initiative”, intended to make the country a strategic supplier of large- and medium-calibre ammunition for EU partners.

Financing is expected to rely on the SAFE instrument, approved in 2025 as part of the EU’s wider rearmament agenda. SAFE provides up to €150 billion in long-maturity loans from EU-raised bond funding to member states for defence procurement, with an emphasis on common projects and European-made equipment. Loan conditions include very low interest rates – around 1% – and repayment periods of up to 40 years, with additional features such as grace periods and VAT exemptions on eligible projects.

Slovakia plans to request about €2.3 billion in SAFE loans, of which €38.5 million would be earmarked specifically for purchases of large- and medium-calibre ammunition for its own armed forces. The remainder is to support other acquisition projects, including infantry fighting vehicles, self-propelled howitzers, small arms and counter-drone systems, while the ZVS framework offers other EU governments a ready-made platform for ammunition orders.

The agreement comes as European governments attempt to rebuild depleted stocks following extensive deliveries of artillery and armoured capabilities to Ukraine and to meet NATO targets for higher defence spending. CSG has emerged as one of Europe’s principal suppliers of NATO-standard artillery ammunition, reporting rapid growth in orders from both Ukraine and EU states and building a vertically integrated production chain centred on Slovakia.

In parallel with the Slovak initiative, CSG has begun licensed production of large-calibre ammunition in Ukraine through its local partner Ukrainian Armor (Ukrajinska Bronetechnika). The project envisages annual output of at least 100,000 155 mm shells and significant volumes of 105 mm and 120 mm ammunition for Western artillery and main battle tanks, with localisation increasing over time as Ukrainian facilities absorb more of the production process.

Neither the Slovak defence ministry nor CSG has stated whether ammunition delivered under the new ZVS framework could be transferred to Ukraine by participating EU governments. SAFE loans are restricted to EU member states, but the scheme allows those states to use financed equipment in support of partner countries, including Ukraine, provided industrial content rules are respected. Slovakia’s current government does not supply weapons to Kyiv from national stocks, but private manufacturers remain free to export subject to licensing, and CSG continues to be involved in ammunition deliveries to Ukraine via the separate Czech-led initiative.

The ZVS deal also illustrates how SAFE is reshaping European defence industrial policy. By tying low-cost loans to common procurement and European production, the instrument is intended to drive long-term investment in munitions, air defence, armoured vehicles and other priority capabilities, while requiring a substantial share of value to come from EU, EEA, EFTA or Ukrainian suppliers. Nineteen member states have already applied for SAFE loans, collectively seeking more than €100 billion in financing, and the full €150 billion envelope has now been allocated.

Beyond Slovakia, other European countries are pursuing their own capacity increases. The United Kingdom, which is outside SAFE, has announced plans to build at least six new munitions and energetics factories and to expand 155 mm shell production, while defence contractors such as BAE Systems invest in new manufacturing processes and domestic explosives production to reduce reliance on overseas suppliers. Together with the Slovak framework, these moves signal a sustained shift in Europe towards larger, more resilient ammunition and explosives output as governments adjust to a prolonged period of heightened security risk.