Grupa Azoty, PGZ unit Nitro-Chem to cooperate on explosives production

GDANSK (Reuters) -Polish state-run chemical group Grupa Azoty and explosives maker Nitro-Chem have signed a letter of intent to cooperate on the production of explosives, the companies said in a statement on Wednesday.

The cooperation with Nitro-Chem, a unit of state-owned defense group Polska Grupa Zbrojeniowa (PGZ), aims to ensure the continuity of raw material supply chains for explosives and jointly seek funding for a new TNT plant.

Grupa Azoty CEO Andrzej Skolmowski said the company was building a new business segment in high-energy materials and wanted to expand its existing cooperation with Nitro-Chem to include the exchange of technical experience.

"We do not rule out a deeper involvement in the project," Skolmowski said in a statement.

Adam Leszkiewicz, CEO of Poland's largest defence company PGZ, said the company was determined to increase domestic ammunition production capacity as quickly as possible, noting that a project for three new factories was already underway.

Poland is planning to raise its defense spending to 5% of its gross domestic product by 2026, marking the highest defense-to-GDP ratio within NATO.

(Reporting by Rafal Nowak; Editing by Matt Scuffham)