Lisbon, Sept. 29, 2026 (Lusa) - Portugal and Belgium signed an agreement on Tuesday to build a new munitions factory on Portuguese soil, in which the Portuguese state will hold a minority stake and which is expected to create around 100 new jobs.
The parties signed the memorandum of understanding this morning at the former Chelas Smokeless Gunpowder Factory in Lisbon, with defence minister Nuno Melo emphasising that the project will create nearly 100 new jobs and involve an investment that could amount to €50 million, as part of the European SAFE loans programme.
As for the location of the new factory, which will specialise in small-calibre ammunition and is due to become operational in 2029, Nuno Melo stated that options such as Viana do Castelo, where the private Belgian partner company FN Herstal already has facilities for the production of weapons, are on the table, with Alcochete as a «complementary possibility».
Regarding the corporate structure of the future factory, the defence minister advocated a model similar to that of OGMA – Indústria Aeronáutica de Portugal, 35% owned by the state through idD Portugal Defence and 65% by the Brazilian company Embraer.
«When we think of OGMA, we see a company that has overcome extremely serious problems, which has been restored to the market, is now highly profitable, and operates in highly technological sectors where the State has a stake but is not the majority shareholder; this model works,» he argued.
Rear Admiral António Mateus, Deputy Director-General for Armaments and Defence Assets at the Ministry of National Defence, and Belgium's National Director of Armaments, Lieutenant-General Bernard Phaleg, signed the memorandum.
In response to opposition criticisms and doubts about the SAFE mechanism, Nuno Melo reiterated that it was a technical decision designed to meet Europe's needs.
«What we are delivering, or will deliver, to the market corresponds to the absolute needs of the European Union, which, as is clearly evident in these war scenarios, has significant room for growth in many areas,» the minister emphasised.
Nuno Melo also pointed out that this is part of an effort to strengthen NATO's European pillar.
«We want Portugal to be part of this equation and, therefore, we want to produce first in Portugal, then in Europe, and finally with the rest of the free world in mind,» he stated.
The ceremony took place against the backdrop of a Krupp-Bosch generator, dating from 1922, at the site of the former Chelas Smokeless Gunpowder Factory, which closed in the late 1990s. Nuno Melo recalled that Portugal once had this and other production capabilities «which disappeared due to disinvestment in the defence sector», which he considered «a mistake».
The minister emphasised that, under the SAFE programme, Portugal aims to restore these capabilities, strengthening the economy and creating «highly specialised» jobs, as well as «boosting Portuguese private companies».
SAFE – European loans on favourable terms that must be utilised by 2030 – is one of the largest defence investments ever, and includes the acquisition of frigates, the restoration of the Alfeite Arsenal, and the production of armoured vehicles, munitions, satellites and drones in Portugal.
The total value of the Portuguese application is €5.8 billion. In addition to this munitions factory, some of the investments under the SAFE programme are already known, namely the acquisition of three new-generation frigates from the Italian firm Fincantieri – the FREMM EVO class – worth €3.9 billion, and 75 tactical vehicles for the Navy's marines worth €133 million, as well as the production of satellites at the Alverca Space Hub, which is due to begin next month.
Last week, the government approved the loan agreement with the European Commission under the Security Action Facility for Europe (SAFE), which will take effect after prior approval by the Court of Auditors.
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