By Sabine Siebold

BRUSSELS Rheinmetall will ramp up production of propellant power for ammunition at its plant in the Bavarian town of Aschau by 500 to 600 metric tons per year, adding some 10% to its current global capacity of more than 6,000 tons, its CEO Armin Papperger said.

Rheinmetall has already kicked off an investment programme with this goal, Papperger told Reuters in an interview late on Thursday.

While this does not mean that earlier plans for a completely new powder plant were off the table, the construction of a new plant with a planned capacity of some 1,500 tons per year would only be commercially viable with state aid or a very large contract, he said.

"You can only do it if you have a very, very large order of, for example, 800,000 artillery shells," Papperger said. "This is not a situation we find ourselves in, which means we are finding other ways such as expanding our powder plant in Bavaria."

In January, Papperger told Reuters that Rheinmetall was considering building a new powder plant, possibly in the eastern German state of Saxony, but that the investment of 700-800 million euros would have to be footed by the government in Berlin.

He argued the plant was needed as shortages in the production of special powders could turn out to be a bottleneck, hampering efforts to boost the output of tank and artillery shells.

Global demand for ammunition has soared since Russia's invasion of Ukraine in Feb. 2022, with Rheinmetall benefiting from it as one of the biggest global producers of artillery and tank shells.

(Reporting by Sabine Siebold; Editing by Conor Humphries)