Europe faces a critical bottleneck in its rearmament efforts: high explosives.
While Western militaries possess sophisticated delivery systems, fighter jets, submarines, and smart missiles, Europe cannot produce TNT at sufficient volume. Russia currently outpaces European TNT production by a staggering margin, creating a dangerous reliance on imports.
We sat down with Joakim Sjöblom, the founder of SWEBAL and former founder of Minna Technologies, to discuss the European TNT shortage, the challenge of transitioning from fintech to defense manufacturing, and why Sweden produces so many unicorns.
Why Defense Manufacturing?
I come from a background in software and technology. I founded Minna Technologies in 2013 and sold it to Mastercard in early 2024. That exit allowed me to figure out what to do next.
By coincidence, this was the same time Sweden joined NATO. I took a patriotic approach. I wanted to contribute. So, I spent time with politicians, the armed forces, and the industry to answer a simple question: Why is Russia producing so much more than we are?
One recurring topic was access to raw materials, specifically explosives. Today, Europe has only one major TNT plant, located in Poland, producing roughly 6,000 metric tons. Russia is producing ammunition requiring 50,000 metric tons.
We have a 900% difference between Russian capacity and European capacity.
Why Is There Such a Shortage of TNT in Europe?
We actually had five or six manufacturing plants in the late 20th century. However, due to disarmament, we closed down several plants, including one here in Sweden, in 1998.
The primary reason was commercial. There was no requirement for large volumes of explosives at the time. Civil applications, such as mining or road construction, existed, but the volumes were small enough that the Polish plant was sufficient.
Now that we are looking at a tenfold increase in ammunition production, we are left with a massive import dependency. The majority of TNT used in Europe is imported, often from Asia. That is the root cause of the problem. If there is a conflict or crisis, we must be self-sufficient.
What Exactly Are You Building?
We are producing the raw chemical TNT. We operate two steps below the armed forces in the value chain. We do not sell to the military; we sell to the companies that manufacture ammunition.
If you are Rheinmetall, BAE Systems, or Saab, and you want to produce ammunition, you need to melt-cast TNT into your shell or missile. We provide that raw material.
Crucially, we source our base materials from around the Baltic Sea, within a 550-kilometer radius of our plant. This ensures a resilient supply chain that doesn’t rely on shipments from across the globe.
Do You Already See Traction?
Absolutely. But first, let me make a distinction. “Defense tech” is one universe, and “defense manufacturing” is an entirely different business.
In defense tech, new players are building AI-driven systems and satellites. But in manufacturing, where you deal with sheer volume, you only have incumbents.
The West has focused on sophisticated systems like fighter jets and smart missiles. We are world leaders there. But we lack quantity. We can build 100 smart missiles, but Russia can build 10,000 stupid ones.
So in terms of traction, demand is not our problem. The EU and NATO are moving supply chains back into the alliance because they understand you cannot import the raw materials for war.
What Are the Risks to Your Business That Keep You Up at Night?
One of the main challenges is the physical reality of our business. We have to build a factory somewhere, and building in Europe is cumbersome.
- Physical impact and bureaucracy. You have environmental regulations, building permits, and safety requirements. Manufacturing explosives in Europe is significantly harder than in Russia. We are trying to catch up, but they are building faster because they do not have the same red tape.
- Velocity of orders. Even though NATO targets have increased, that funding hasn’t yet fully translated into purchasing orders. We need the armed forces to place 5, 8, or 10-year orders, not short-term contracts, to justify the infrastructure.
Do You Think There Is Space for Vertical Integration: Moving Into Ammunition Manufacturing?
That was actually our initial ambition. We wanted to vertically integrate ammunition production. But we quite quickly realized that if you do that, you will compete with the big companies.
You will not be friends with BAE, Rheinmetall, and the others. And to be honest, they are good at what they do. As a startup, it is much more efficient to focus on a beachhead and a very narrow area where you can collaborate with these players rather than compete with them.
So our job here is to make sure that these big players of the industry are actually able to increase their production.
We are focusing on one of the bottlenecks they are currently facing.
What Are the Three Critical Pillars for Building a Defense Company?
I can answer from my history, and the answer is surprisingly common. Two things are always the same, and the third one is specifically important for defense:
- Funding. Is there money available to fund the project?
- People. Do you have the best people on your team?
- Political anchoring. This is specific to our industry. Do you have the support of the politicians and the armed forces? You need that alignment to succeed.
How Do You Get and Retain Top Talent in This Particular Space?
I think that’s the most important ingredient in any business: that the value of your company is basically the sum of the people working in it, because you’re reducing risk and increasing the likelihood of success.
We are in a very good place because there are very few new players in our industry. There is a lot of talent that would prefer to work for a new-generation company rather than a 100-year-old one.
We usually say that we want to build a company that is a hybrid between Rheinmetall and Spotify. We want to keep the backbone of the industry and everything related to safety and security, like Rheinmetall.
But the culture, the way we work, and how we use modern technology are much more like Spotify’s. We try to marry these two industries into a very efficient workplace.
Why Is Sweden Such a Great Place to Start a Company?
After Silicon Valley, Stockholm has the second-highest number of unicorns per capita in the world. We have the key ingredients: access to capital, access to talent, and a culture of global scaling.
Because Sweden is a small market, companies are “born global.” We design our organizations for a global customer base from day one. We also have a cycle of repeat founders, people who have made mistakes, achieved success, and are now reinvesting their capital and experience into the community. Nordic Angels is a great example of founders reinvesting in new businesses.
And, of course, it is very cold for six to eight months of the year. We are locked inside, so we get a lot of work done.