"Bank of Explosives: How it will help the state, army and business
Last week, the Technological Forces of Ukraine launched a public tool – portal "Life Cycle: Explosives Production". It describes in detail each of the stages (there are 18 of them) that an explosives manufacturer in Ukraine goes through. Each of them contains industry proposals on how to improve regulation, launch new tools or improve market conditions so that manufacturers can supply ammunition to the frontline without regulatory obstacles.
One of the critical stages in the production of explosives is the procurement of explosive precursors, initiating agents and other sensitive components for the production of ammunition. Given the shortage of explosives both in Ukraine and among European partners, the need for an "explosives bank" is becoming increasingly urgent.
The manufacturers-members of the Association of Manufacturers of Ukraine, who face daily difficulties due to the lack of necessary conditions and regulation for the explosives market, have their own vision of what the state mechanism of the "bank of explosive materials" could look like today. This text describes what it is, how it can be filled, and how it will help the state, the front, and business.
What is " explosives bank "
Ukraine is critically dependent on imported explosive raw materials, without which stable production of ammunition is impossible.
the "Bank of Explosives" is a government mechanism that would allow for centralized procurement, importation, accounting, and distribution of raw materials to manufacturers. It would also help speed up supplies to the front by two to three times and scale production without putting an excessive burden on business.
Government Resolution No. 763 created the conditions for launching and scaling up the production of explosives. This is what the industry needed, and we supported it. The next step is to improve it and make it permanent .
At the same time, the Resolution does not contain the key mechanisms necessary to form the institutional basis for the so-called "bank of explosives" – a state mechanism for centralized accounting, import and distribution of raw materials for the production of ammunition. There is also currently no responsible agency for the full or partial implementation of this idea. To launch such a mechanism, the responsible body must have all the tools to validate the companies that will be in the register of ammunition manufacturers, assess their capabilities, etc .
How it should be filled
To understand what the size of this bank should be, two factors should be assessed: the needs of the Defense Forces and the amount of raw materials available to Ukrainian producers. With this data, the state will understand:
- what is the urgent need to respond promptly to requests from the Defense Forces;
- how to work with annual planning in accordance with the expected volume of ammunition production for the front;
- and what should be the strategic program that will form the reserve for the missile program, shells.
According to the manufacturers of ammunition and explosive materials that are members of the TCU, the "explosives bank" as a state mechanism can work as follows. The responsible agency procures raw materials with the coordination of the SESU, which authorizes imports. The agency then accumulates the imported raw materials and keeps track of them. After that, it transfers the raw materials to manufacturers for the production of ammunition under a state contract.
To ensure that the imported raw materials are used efficiently, members of the TSU propose to introduce conditions under which explosives will be supplied by companies included in the register of explosives manufacturers that have a state contract for the manufacture and supply of ammunition to the Defense Forces.
A need that is long overdue
During the active phase of the war, the demand for explosives in the military is enormous. However, logistical, currency, and licensing barriers discourage private producers from scaling up production. The situation is further complicated by the unpredictability of production. Today, explosives producers have no guarantees of timely delivery of imported raw materials. Because of this, they cannot plan production, and therefore cannot enter into a government contract without being sanctioned for late performance.
If the "explosives bank" is launched, it will primarily help the frontline, and the state and business will benefit from this mechanism.
How it will help the frontline? Predictability and speed. The association's producers predict that the "raw material – ammunition – front" cycle time can be reduced by two to three times due to the availability of the "explosives bank." As a result, the military will be able to receive the required amount of ammunition per month, quarter, or year in a predictable and stable manner.
The state will also benefit if it launches a "bank". It will allow not only to control critical raw materials, but also to optimize the budget by purchasing these raw materials in large quantities, as opposed to the volumes that a private producer can purchase on its own. This will also ensure transparency in planning needs. By creating the necessary conditions for private explosives producers, Ukraine will be able to scale up ammunition production, according to the TSU members, at least tenfold.
Among the opportunities and benefits for business, is guaranteed access to raw materials without having to look for a counterparty yourself. The ability to access raw materials through the state mechanism will also reduce logistics costs. Since the explosives will already be in Ukraine, production will start faster. And the Defense Forces will receive the necessary explosives and ammunition much earlier, which will benefit everyone.
