Infrastructure Works Will Become More Expensive – Due to TNT Shortage

Energy, food, mineral fertilizers – these have so far been the main goods whose prices have risen due to reduced supply because of the war in Ukraine. However, it seems that the war in Ukraine has revealed another vulnerability of the modern globalized economy, which is facing a shortage of capacity for TNT production, significantly increasing the cost of armaments, but also affecting some other activities in purely civilian sectors of the economy.

The Law of Supply and Demand

If one looks deep enough into the production process, without TNT there are not only no artillery shells, but there is also no demolition of terrain and outdated infrastructure, and it is widely used in mining, primarily in demolition in quarries, and in works related to the construction of nuclear facilities. Its price has skyrocketed to astronomical heights due to the war in Ukraine.

The wartime demand for TNT has produced this consequence through ruthless mathematics. Standard 155 mm shells contain approximately 10.5 kilograms of this explosive. Ukraine fires about 5,000 such shells a day, while Russia launches at least twice as many, and according to NATO estimates, up to seven times more. Not all artillery and other projectiles used in Ukraine are fully loaded with TNT, but estimates suggest that for artillery ammunition alone, the consumption of this explosive in the conflict between the two countries could amount to between 60 and 70 tons per day, or between 22,000 and 25,000 tons per year.

How does this compare to production capacities? The capacity of Chinese TNT production is estimated at 20,000 tons per year, while Russia’s is at 50,000 tons. However, this production was excluded from the supply for Western demand in 2022, and after it was concluded at the end of the last century that TNT is a cheap commodity and that its production heavily pollutes the environment, the Western supply has dwindled to just a few letters with a total capacity similar to that of China. The largest player is Polish Nitro-Chem, which holds the only large European factory producing TNT, with an annual capacity of 12,000 tons. For the remaining European producers – Czech Explosia, Spanish MAXAMCorp, Romanian Dunarit, French Eurenco, and Vitezit from Bosnia and Herzegovina – it is estimated that they produce a total of about 8,000 tons of this explosive per year.

The Search for Suppliers

It is therefore not surprising that some estimates of how much prices have risen are indeed astronomical. John Summers, the director of Global Ordnance, an American company that mediates in the procurement of military materials, stated in an interview with The War Zone magazine that American government clients seeking transport by American ships today pay about $20 per kilogram of TNT.

– We had a contract with Zarya from Ukraine for the procurement of materials for the U.S. government and commercial contracts. Before the outbreak of the war in 2022, we managed to import 2,000 tons of that material for the U.S. government and commercial sales, and we wanted to import 5,000 tons per year. However, at the beginning of the conflict, that factory fell behind enemy lines and ceased production. Since then, we have been looking for replacements for clients, especially as the demand for TNT has increased due to conflicts in Israel and Ukraine. The U.S. recently awarded a contract for the construction of a TNT factory in Kentucky. Our company participated in the tender, but we did not receive the contract. We are actively looking for suppliers around the world for our clients – said Summers to The War Zone magazine.

Although some sources indicate that the price for a kilogram of TNT has risen to $45, Summers’ data aligns with the price that Nitro-Chem achieved with the U.S. military. Reuters reported in April of this year that the Polish factory signed a contract to supply the U.S. military, under which it will deliver 18,000 tons of TNT by 2028, all for a price of $310 million. This amounts to about $17 per kilogram. In the 1970s, when TNT was produced in large quantities in American factories in Iowa, Tennessee, and Virginia, a kilogram of TNT cost about 50 cents, and before the outbreak of the war in Ukraine, which drastically changed global supply chains for this product, it ranged from $1 to $5 per kilogram, depending on the type of use and the ordered quantity.

The Polish and U.S. military deal, however, does not mean that prices will stabilize, and it certainly will not reduce demand. Demand depends solely on the intensity of the armed conflicts in Ukraine and the Middle East and will only stabilize if those conflicts begin to calm down. The rates of fire in Ukraine are enormous for modern warfare and dramatically exceed the needs of the civilian sector for explosives. In Ukraine, tens of tons of TNT are consumed daily, while in America, only kilograms are used for precise blasting in quarries and demolition work.

How Long Will the War Last

Moreover, the fact that the U.S. has effectively purchased half of the three-year capacity of the Polish factory by 2028 indicates that the armed conflict in Ukraine will last at least until then. Nitro-Chem has been the main supplier of TNT for the Ukrainian war machine, primarily through lethal products arriving in Ukraine from the U.S. Additionally, America has met part of its needs (and the needs of its foreign policy allies, as seen in the case of Ukraine) from the extraction of TNT from decommissioned ammunition and military stocks, which has been halted precisely to reserve those stocks for Ukraine.

As Summers indicated, America has decided to establish greater self-sufficiency and less dependence on foreign suppliers of TNT, and has already initiated an initiative to build a factory for this explosive in Kentucky. Interestingly, the U.S., the world’s most powerful military force and the backbone of NATO, currently has no domestic production of TNT. It shut it down in 1986 when TNT was cheap, and environmental difficulties were too great due to the toxic waste generated in the production process, known as red water.

Planned Investments

The U.S. government will support the investment in the factory in Kentucky with $435 million. It is not yet known who the partner will be, but in principle, explosive factories in America are government-owned and controlled by the Pentagon, managed by giants from the defense sector. It is expected that by 2028, when the contract with Polish Nitro-Chem expires, this factory will be operational. All production from Kentucky will be for military purposes.

European countries are not in a much better situation either. In the same market conditions and for the same reasons, Germany, France, and Great Britain also closed their production capacities 35 to 20 years ago. They relied, like the U.S., on imports and market specialization, but the trend is changing in Europe as well. Sweden, with the help of Sweden Ballistics, has launched a project to build a facility near Nora, where it plans to produce 4,500 tons of TNT per year starting in 2027. Finnish Forcit also plans to establish a TNT factory, supported by Tesi, a state company through which Finland has been supporting private companies and investments for about thirty years. It is estimated that the Swedes could invest as much as the Finns, 200 million euros, but this has not yet been confirmed. In any case, it points to the scale of the crisis with the shortage of TNT in the market, as well as the level of its current and potential prices and the new European direction towards defense, including special funds of $500 million aimed at increasing the production of all types of ammunition.

The Matter of Priorities

However, all this does not mean much for the civilian sector because the constellation of priorities is such that security has not only the usual importance but also significantly greater due to the proximity of the Russo-Ukrainian war, its intensity, and nuclear danger. Market-wise, about half of the demand typically falls on the military and defense sector, about a third relates to mining, slightly less than a fifth to construction, and the remainder goes to various other applications. In the military, it is used as a filling for artillery shells, rockets, bombs, and other explosive devices, as it can be mass-produced and withstand transport over rough terrain. In mining and construction, besides demolition, it serves as a means for rock fragmentation and precise drilling, which subsequently allows for the extraction of materials for cement and other construction aggregates. The priority of security is understandable, but business must continue, and replacements for TNT are not yet commercially scaled.

Explosive Alternatives

Some manufacturers in America have begun producing these replacements. The most potential lies with pentrite (PETN – pentaerythritol tetranitrate) with a strength equivalent of 1.24 compared to a unit of TNT. Currently, it is produced by three plants in America, and although it is believed they can increase production, it is unclear how quickly. Dinitroanisole has also begun to be produced in French Eurenco, in addition to America. Its advantages are a lower melting point and a safer production process, but this production is still in its infancy. Cyclonite and octogen are produced in Czech Explosia and in India, but although they have high energy in plastic forms, their high melting points and chemical instability make them ineffective for casting into metal ammunition frames compared to TNT. The last alternative is ammonium nitrate with fuel oil (ANFO – Ammonium Nitrate Fuel Oil). This civil explosive widely used in construction has about half the strength of TNT per comparable unit. It should be noted that the key component in the production of this explosive is ammonium nitrate, and before the war, Russia and Ukraine held over 70% of production. Today, the West cannot rely on Russian capacities, and Ukrainian ones have been destroyed or captured.

Therefore, scaled production of civil and military ANFO as a replacement for TNT will still be difficult to achieve, as will other replacements, with pentrite currently holding the greatest potential for realistic development. Industry experts estimate that scaling production could follow after three to four years of intensive investments and accompanying advance orders, so it is more likely that the inflation of TNT will ultimately be borne by citizens as part of increased state military spending due to more expensive ammunition and higher costs of infrastructure construction work.