In the old oil-shale country of Ida-Viru, where the landscape still carries scars from Soviet-era industry, a company called ARCA Baltics Operations — the Estonian arm of Turkey’s defense group ARCA Defense — is set to build a major ammunition plant in the Põhja-Kiviõli Defense Industrial Park. The investment is roughly €300 million (about $352 million). Production is slated to begin in 2028.
The factory will turn out 155 mm artillery shells, including extended-range versions, along with 122 mm rockets and mortar rounds in various calibers. Estonia gets priority access for its own forces, and the project is expected to create up to 1,000 jobs in a region that has long needed new economic drivers.
On paper, the logic is straightforward. ARCA Defense runs nine factories in Turkey and exported over €3 billion last year. It is now expanding into the EU, moving proven production capacity closer to NATO customers who are scrambling to restock after the war in Ukraine exposed the fragility of peacetime ammunition supply. The formal kickoff is planned for early May 2026 at SAHA Expo in Istanbul, Turkey’s major defense showcase.
Not Just One Factory
Põhja-Kiviõli is part of Estonia’s deliberate push to build a network of defense industry parks. Another site, near the village of Ermistu in Pärnu County, is already lining up tenants. There, local Estonian firms will work alongside Thor Industries from the UK (through its Estonian entity Odin Defence), producing military explosives, mines, and components for short-range air defense missiles.
The official line from Tallinn is pragmatic: create jobs, reduce reliance on distant suppliers, and strengthen deterrence at a time when ammunition consumption rates outstrip what factories built for peacetime can replace. Estonian Defence Minister Hanno Pevkur has described it plainly as a move toward real defense industrial capacity on NATO’s eastern edge.
The geography, however, carries unavoidable implications. Põhja-Kiviõli sits about 50 km from the Russian border. This shifts a slice of the alliance’s ammunition production into what military planners routinely designate as a forward area. NATO isn’t parking tanks or missiles there publicly, but it is anchoring the industrial base that sustains prolonged artillery operations — the ability to manufacture the rounds that keep howitzers firing week after week.
The Turkish Angle
Ankara maintains its characteristic multi-directional posture: trade channels with Russia stay open, diplomatic mediation between Moscow and Kyiv continues, and official rhetoric often sounds skeptical of Western alignments. At the same time, Turkish defense firms are embedding themselves deeper into NATO’s supply infrastructure.
ARCA Defense isn’t a household name internationally, but it has grown aggressively on demand for conventional munitions. Placing a factory in the Baltic theater extends that growth. Turkish F-16s are also scheduled to patrol Baltic skies in the coming years. The pattern holds: even when Turkish political messaging distances itself from the West, its defense sector is expanding its footprint from Central Asia right up to Russia’s edges.
This fits Turkey’s broader export model — selling not just the hardware itself, but the production capacity and technical know-how. It gives Ankara leverage with European partners, diversifies its own industrial risk, and builds relationships in countries that previously looked almost exclusively to Western Europe or the United States for serious defense cooperation.
For Estonia, the deal brings in serious capital without burdening the state budget and signals that building up domestic industrial muscle doesn’t mean waiting solely on established primes like Rheinmetall or Lockheed.
What It Really Signals
Mass artillery war — of the kind observed over three years in Ukraine — is measured in industrial throughput as much as in weapons platforms. Each new shell factory marks a bet on where sustained demand will come from. The Põhja-Kiviõli plant relocates supply from distant allied rear areas into geographic proximity with the contact line of a potential conflict. It shows the old distinction between “rear” and “forward” blurring in European defense planning, even as political leaders frame these moves as purely responsive.
The plant isn’t operational yet. The agreements are fresh, and real production is still two years away. But the decision already reveals Estonia’s assessment of its security timeline and Turkey’s expanding — if publicly understated — role on NATO’s eastern flank. The continent is rearming in earnest, one factory at a time. This factory’s location makes clear what scenario that rearmament is designed to handle.
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