NATO member Romania signed an agreement Monday with German defense manufacturer Rheinmetall to build a gunpowder factory in central Romania, as Europe accelerates efforts to strengthen defense capabilities in response to Russia’s ongoing aggression.

Prime Minister Ilie Bolojan described the joint venture between the Romanian state and Europe’s largest arms producer as proof that Romania is “emerging as a player with potential in the defense industry of Southeast Europe.”

The €535 million ($616 million) facility will be built in the town of Victoria, Brasov County, with construction scheduled to begin in 2026 and take three years to complete. The project is expected to create around 700 local jobs. Romania plans to fund part of its share through the European SAFE mechanism, designed to enhance defense readiness.

“After many years of limited activity in our defense industry, Romania is entering a new stage due to the changing security situation in Eastern Europe,” Bolojan said, welcoming Rheinmetall’s growing presence in the country.

Rheinmetall CEO Armin Papperger said the ammunition powder produced at the new plant would be “needed worldwide and especially in Europe,” making Romania an important contributor to both the European and NATO defense ecosystems.

Since Russia’s full-scale invasion of Ukraine in 2022, Romania has taken on a more prominent role within NATO, donating a Patriot missile system to Kyiv and hosting an international training hub for F-16 jet pilots from allied nations, including Ukraine.