Denmark’s plan to restart ammunition production at a historic North Jutland factory has hit yet another cost overrun, with the project now exceeding 1.3 billion kroner. The facility, which was supposed to reopen within two years, has faced repeated delays and budget increases since the government announced the plan in 2023.
A Project Plagued by Rising Costs
From Affordable Renovation to Billion Kroner Rebuild
When Defense Minister Troels Lund Poulsen announced plans to restart ammunition production in September 2023, the promise seemed straightforward. Denmark would renovate a decommissioned factory in Elling, near Frederikshavn, and have it producing artillery shells and rifle ammunition within two years. The initial estimate ranged from 70 to 200 million kroner, a modest investment to restore Denmark’s strategic production capacity.
That estimate proved wildly optimistic. By summer 2025, the price had ballooned to 883 million kroner after inspections revealed the buildings were in far worse condition than anticipated. Now, just months later, the Defense Ministry has announced another 480 million kroner in additional costs, bringing the total to approximately 1.36 billion kroner.
Why Costs Keep Climbing
The latest cost increase stems from safety and infrastructure requirements that were apparently not fully accounted for in earlier estimates. According to the Defense Ministry, the additional 480 million kroner will cover expanded building areas to reduce detonation transfer risk, an additional firing range, infrastructure adjustments, and other modifications. In practical terms, the buildings must be spaced farther apart to prevent a chain reaction if one building explodes.
Journalist Nikolaj Rytgaard from Jyllands-Posten, who has closely tracked the project, explains that the original plan to simply move into existing structures proved completely unrealistic. Instead, the Defense Ministry is essentially building a new factory from scratch. The list of required work includes safety spacing between buildings, new roads, expropriation of neighboring properties, perimeter fencing, and additional testing facilities.
Political Frustration Mounts
The repeated cost overruns have triggered sharp criticism from members of the parliamentary defense committee. Lisbeth Bech-Nielsen, defense spokesperson for the Socialist People’s Party and a member of the defense agreement group, called the situation a poor reflection on the Defense Ministry. She argued that many of these requirements should have been identified from the start, particularly for a project involving explosive materials at a known industrial site.
Defense Minister Troels Lund Poulsen acknowledged the cost increase but noted that it can be covered within allocated reserves. That explanation has not satisfied critics. Bech-Nielsen pointed out that setting aside large reserves for every project allows any overrun to be technically “within budget,” but it does not excuse poor planning or fulfill the government’s responsibility to use taxpayer money efficiently.
Three Hundred Years of History, Five Years of Closure
From State Arsenal to Spanish Ownership
The ammunition factory at Elling has roots stretching back more than three centuries. Originally established in Copenhagen in 1676 as the Fireworks Company, the operation moved to North Jutland in 1954. For decades, the facility served as Denmark’s primary ammunition production center, supplying the military throughout the Cold War and building strategic reserves. The plant operated under state control until 2008, when the Defense Ministry sold it to Spanish ammunition manufacturer Expal.
The privatization was based on three criteria: purchase price, guaranteed ammunition supply to Danish forces, and development plans for continued production. Expal rebranded the facility as Denex and expanded operations to include commercial ammunition, pyrotechnics, and ammunition destruction services. The company employed about 63 workers and served both military and civilian markets across Scandinavia.
Closure and Strategic Vulnerability
In February 2020, Expal announced it would shut down the Elling facility due to years of losses. Production ceased by the end of March 2020, eliminating all jobs and ending more than 340 years of continuous Danish ammunition manufacturing. For nearly two years, Denmark had no domestic military ammunition production capacity, creating a vulnerability that would become painfully clear following Russia’s invasion of Ukraine in 2022.
The Ukraine conflict exposed critical ammunition shortages across NATO. Artillery-intensive fighting consumed shells at rates far exceeding peacetime production capacity, and global supply chains struggled to meet demand. European militaries recognized they had allowed their defense industrial base to atrophy during decades of relative peace. Denmark joined other nations in scrambling to restart production capabilities that had been discarded as unnecessary and unprofitable.
The Long Road Back to Production
State Returns as Minority Owner
In 2025, the Defense Ministry signed a contract with Norwegian ammunition company Nammo to re-establish production at Elling. Under the agreement, the Danish state took a 15 percent minority stake in Nammo Denmark, marking a partial return to state involvement after 17 years of full privatization. Nammo will make substantial capital investments and retain operational control, while the state’s equity position signals strategic interest in supply security.
The ownership structure represents a compromise between market discipline and state oversight. The government allocated approximately 8.6 billion kroner from a special acceleration fund to support both facility renovation and ammunition stockpile replenishment. This substantial investment reflects the seriousness with which policymakers now view the security threat and Denmark’s need for reliable ammunition access.
Production Still Years Away
Despite the urgency and massive funding, actual ammunition production remains distant. Nammo expects to begin manufacturing in the second half of 2027, focusing initially on 155mm and 120mm artillery shells and standard NATO rifle ammunition. The two-year timeline allows for facility renovation, equipment installation, workforce recruitment and training, and obtaining necessary industrial and environmental permits.
Rytgaard from Jyllands-Posten and his colleagues created a “powder clock” tracking time elapsed since the government first promised renewed production. As of now, more than 1,000 days have passed without a single round manufactured at the facility. That clock will continue ticking for at least two more years, meaning Denmark remains entirely dependent on imports for ammunition until late 2027 or early 2028.
Local Concerns and Safety Debates
Life Next to an Ammunition Factory
Not everyone in Elling welcomes the factory’s return. Some residents have expressed frustration and concern about living near a facility that will manufacture and store explosive materials. Leif Thomsen, who lives near the site and has attended multiple public meetings on the project, called the situation somewhat ridiculous. He noted that officials cannot guarantee safety if an accident occurs, yet simultaneously claim that living near the factory is no more dangerous than cycling.
The Defense Ministry has established three safety zones around the facility with different restrictions. Zone one prohibits public roads, harbors, and railways. Zone two prohibits private homes and buildings or activities obviously unrelated to factory operations. Zone three prohibits hospitals, schools, kindergartens, high-rises, assembly halls, and similar structures. Thomsen lives 180 meters from zone two, where private homes are banned.
Expansion Brings Factory Closer
The latest cost increase includes funds to expand the facility’s footprint, creating greater distances between buildings to prevent detonation transfer. For nearby residents like Thomsen, this expansion means the factory edges closer to their properties even as officials insist on improved safety. He expressed skepticism about the calculations behind the safety zones, noting that authorities can only plan for scenarios they anticipate, not unforeseen accidents.
Some residents have indicated they would prefer compensation and relocation assistance rather than reassurances about calculated risks. The Defense Ministry has not publicly addressed whether such programs will be offered to homeowners within or adjacent to the safety zones.
Parliamentary Oversight and Accountability Questions
Defense Committee Kept in the Dark
Members of the parliamentary defense committee learned of the latest cost overrun only when the Defense Ministry briefed them shortly before the public announcement. According to Rytgaard, several committee members expressed feeling taken hostage by a decision that initially sounded promising but has deteriorated into what some called a farce. The repeated surprises have eroded confidence in the ministry’s project management capabilities.
The pattern of underestimation raises questions about due diligence and expertise within defense procurement agencies. Critics argue that basic requirements for an ammunition factory, such as explosion safety distances and specialized infrastructure, should have been identified through standard engineering assessments before announcing timelines and budgets.
Broader Implications for Defense Spending
The Elling project is just one element of Denmark’s broader defense modernization and expansion program. The government has committed to increasing defense spending significantly in response to the changed security environment. Repeated cost overruns and delays on high-profile projects like the ammunition factory risk undermining public and parliamentary support for defense investments.
Bech-Nielsen emphasized that taxpayers have a right to expect competent stewardship of defense funds, particularly on relatively predictable infrastructure projects. She argued that maintaining public trust in defense modernization requires demonstrating that money is spent efficiently and that officials provide honest assessments rather than optimistic promises that later prove unfounded.
Looking Ahead
Production Timeline Remains Uncertain
Even with the additional funding now allocated, the 2027 production start date remains aspirational rather than certain. The scope of work required at the Elling site is extensive, and construction projects of this complexity frequently encounter additional delays. Environmental permitting, specialized equipment procurement, and workforce development all present potential bottlenecks that could push the timeline further into the future.
The Defense Ministry has not provided detailed production capacity targets, making it difficult to assess whether the investment will actually meet Denmark’s ammunition needs. Questions remain about whether the facility will primarily serve Danish forces, contribute to NATO stockpiles, or operate as a commercial enterprise selling to multiple customers.
Nordic Cooperation and Strategic Context
Defense Minister Troels Lund Poulsen has framed the Nammo partnership as part of broader Nordic defense industrial cooperation. Nammo operates production facilities across Scandinavia, potentially allowing coordination on ammunition standards and supply sharing among Denmark, Norway, and Sweden. This regional approach could provide resilience and efficiency benefits compared to purely national production.
The emphasis on Nordic cooperation also reflects NATO’s broader effort to decentralize ammunition production across allied territories. Concentrating production in a few locations creates vulnerability to disruption, while distributed production across multiple member states improves overall alliance resilience. Denmark’s investment in Elling, despite the mounting costs and delays, contributes to this strategic diversification.
Sources and References
DR: Ammunitionsfabrik bliver igen igen dyrere: ‘Ikke en god historie for forsvaret’
