CSG bets EUR 100m on German energetic-materials hub
Industrial and technology group CSG has completed the purchase of the 57-hectare Gnaschwitz industrial site near Bautzen in Saxony, committing more than EUR 100 million to its initial development. The acquisition, executed through CSG's German subsidiary CSG Energetic Materials Germany GmbH, was made from explosives manufacturer MAXAM. CSG plans to establish production capacity for nitroglycerin and nitroglycerin-based propellants at the site while simultaneously developing ammunition and ammunition component manufacturing.
The move is CSG's second major German acquisition in under two years. In October 2024 the group signed a purchase agreement with US conglomerate International Flavors and Fragrances for the MSM Walsrode facility in Lower Saxony, completing that transaction in May 2025. Walsrode is already being converted to produce energetic nitrocellulose for ammunition manufacturing. Together, the two sites are intended to form the foundation of a vertically integrated German platform stretching from raw energetic materials through propellant components to finished ammunition.
Vertical integration as a strategic weapon
The logic driving CSG's German build-out is straightforward: ammunition is only as available as its least-supplied precursor. Nitroglycerin and nitrocellulose are the chemical bedrock of double-base and triple-base propellants used across small-, medium- and large-calibre ammunition. Securing in-house production of both materials insulates CSG's Medium and Large Calibre and Ammo+ divisions from the kind of external-supplier bottlenecks that have repeatedly constrained European ammunition output since Russia's full-scale invasion of Ukraine in 2022.
Jan Marinov, CEO of CSG Defence Systems, framed the rationale directly: "The European defence industry needs not only greater ammunition production capacity, but also reliable supplies of strategic energetic materials without which ammunition cannot be manufactured."
Gnaschwitz itself carries more than 150 years of industrial heritage, with production on the site dating to 1874. Even after the planned EUR 100 million investment phase, CSG says the site will retain headroom for further expansion, including medium-calibre and tank ammunition assembly and 120mm mortar ammunition production. The initial development phase is expected to create up to 125 jobs, the company says.
The macro read-across: European defence-industrial capital is consolidating
CSG's moves sit within a broader structural shift in European defence spending that carries implications well beyond any single manufacturer. NATO's push towards the 2% of GDP defence-spending threshold, combined with the European Commission's European Defence Industry Programme and the proposed ReArm Europe facility, is generating a wave of capital reallocation into the continent's defence industrial base. That capital is not flowing evenly: it is concentrating in vertically integrated producers capable of guaranteeing sovereign supply chains rather than in integrators dependent on globally dispersed tier-two and tier-three suppliers.
Germany is a particular focus. As Europe's largest economy and a country that has publicly committed to a generational Zeitenwende in defence posture, Saxony and Lower Saxony are emerging as anchor locations for the re-industrialisation of ammunition and propellant manufacturing. For investors tracking European defence-sector exposure, the relevant signal in CSG's Gnaschwitz acquisition is not the headline EUR 100 million figure alone, but the strategic logic it reflects: control of the energetic-materials feedstock layer is increasingly being treated as a competitive moat, and the number of credible European players able to operate at that level of integration is small.
The next question for the sector is whether CSG's German platform will attract co-investment from sovereign or NATO-aligned institutional capital as the European Defence Fund and bilateral government procurement agreements increasingly tie funding to demonstrable supply-chain resilience. With Gnaschwitz and Walsrode now both in hand, CSG is positioning itself as one of the few vertically integrated answers to that question on the continent.