Skip to Content News Archives Economy Energy Oil & Gas Renewables Electric Vehicles Mining Commodities Agriculture Real Estate Mortgages Mortgage Rates Finance Banking Insurance Fintech Cryptocurrency Work Wealth Smart Money Wealth Management Investor Personal Finance Family Finance Retirement Taxes High Net Worth FP Comment Executive Women Puzzmo Newsletters Financial Times Business Essentials More Innovation Information Technology FP500 Podcasts Small Business Lives Told Tails Told Shopping Financial Post Store Obituaries Place a Notice Advertising Advertising With Us Advertising Solutions Postmedia Ad Manager Sponsorship Requests Classifieds Place a Classifieds ad Working Profile Settings My Subscriptions Saved Articles My Offers Newsletters Customer Service FAQ News Economy Energy Mining Real Estate Finance Work Wealth Investor FP Comment Executive Women Puzzmo Newsletters Financial Times Business Essentials HomeNewsA munitions-manufacturing hub is coming to Saskatchewan — and has already pre-sold years’ worth of explosivesA Saskatoon-based company is set to be a key supplier of a crucial component Europe needs to replenish its munition stocks You can save this article by registering for free here. Or sign-in if you have an account.Cellcore Technologies Inc. is set to be a key supplier of a crucial component Europe needs to replenish its munition stocks. Photo by LIONEL BONAVENTURE/AFP via Getty Images filesSaskatchewan is slated to be a defense manufacturing hub as Cellcore Technologies Inc. enters a niche but lucrative market.Subscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.Subscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one account.Share your thoughts and join the conversation in the comments.Enjoy additional articles per month.Get email updates from your favourite authors.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an AccountorThe Saskatoon-based company is set to be a key supplier of a crucial component Europe needs to replenish its munition stocks."We have already pre-sold the first three years of production out of this facility," said David Brough, the company’s chief executive and owner.The company is aiming to produce 7,000 tonnes of powdered nitrocellulose in its first year. It's a combustible component, also known as guncotton, used to propel ammunition in firearms and artillery.Breaking business news, incisive views, must-reads and market signals. Weekdays by 9 a.m.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Posthaste will soon be in your inbox.We encountered an issue signing you up. Please try againCanada is not currently producing any nitrocellulose, but with several projects on the way to match the billions of federal dollars spent to develop the country's national defense sector, that's about to change.Cellcore is working with English River First Nation's economic arm, Des Nedhe Management Inc., on a Saskatchewan-based defense manufacturing and innovation campus. They secured a site in the province but haven't publicly announced its location.The first phase of the facility is expected to cost $200 million to build, with later phases adding capacity to produce other military-grade propellants and explosive materials, known as energetics. Construction is set to begin before October, Brough said.The grounds are already equipped with rail and road access, allowing it to expedite its construction phase and potentially begin production in early 2029, said Brough. Cellcore claims that it's two years ahead of its competitors.A headstart could set Cellcore apart from the pack as other Canadian projects rush in to meet European demand.According to Stéfane Marion, chief economist and strategist at National Bank of Canada, the country has a competitive advantage to use its domestic wood pulp industry to make nitrocellulose."We have the resources. We have the best fiber in the world," Marion said.Even though China is one of the top global suppliers of the munitions-grade powder, European countries want to secure a manufacturer in a western-allied country to supply their militaries, Brough said.Canada is stepping up to take on that role as it fortifies its own military capabilities. Nitrocellulose production is crucial to the federal government’s national defense strategy released in February.Since taking office, Prime Minister Mark Carney has invested more into strengthening Canada's defense to meet the country's commitments to NATO to spend two per cent of national GDP on the sector per year in 2025. NATO members are asked to boost that spend to five per cent of GDP annually by 2035.Geopolitical tensions continue in Europe as the war between Ukraine and Russia is in its fifth year. The European Union is mobilizing 800 billion euros under a five-year plan to strengthen its defense capabilities.With modern drone warfare reaching farther distances, Marion said it's safer to have the industrial base in North American where it isn't vulnerable to attacks."It makes a lot of sense for Canada to be a key supplier of something that is essential for the defense industry," the economist said.Canada has made itself "relevant" in the global supply chain with these projects, said Marion.Cellcore's operations were spurred by Brough's European contacts in the defense sector reaching out and asking them to enter the market.He anticipates that under current conditions, it would take 10 years for NATO and European Union countries to stockpile an arsenal. That would maintain strong demand for Cellcore's first decade of production."It's a lucrative industry to be in," Brough said.Cellcore isn't the only company capitalizing on chronic undersupply in the Canadian market.Marion said American munitions maker General Dynamics Corp. is the most promising with $355.7 million in federal funds backing its Valleyfield project in Quebec. The nitrocellulose facility would be an expansion on a pre-existing ammunitions assembly hub.General Dynamics could produce as much as 7,800 tonnes of nitrocellulose annually, potentially cornering the domestic market.Minister of National Defence David McGuinty previously said it would take three to four years for General Dynamics’ facility to ramp up volumes once it opens in 2029.Brough isn't concerned with the competition."There could probably be five facilities in Canada to service not only Canada but all our NATO allies," he said.There could soon be that many facilities in Canada if all the prospective projects pan out.Former Liberal MP Patrick Gagnon's company, Nalagx Corp., is partnered with French energetics manufacturer Eurenco to make the propellants for heavy artillery and shells. Fewer details have been announced on that facility, but the company aims to be in production by 2029.Calgary-based Sterling Energetics Inc. also has plans for an over $1-billion energetics facility situated west of the Albertan town Wetaskiwin.The massive project would be vertically integrated, annually producing 13,000 tonnes of wood pulp and 4,500 tonnes of nitrocellulose.Sterling Energetics’ plans are similar to Cellcore's later phases. Both companies see potential in developing more complex formulations that would propel long-range artillery by using nitroglycerin as a powerful explosive additive.JR Cox, chief executive of Sterling Energetics, said he's finalizing buyers and investors for the project before any construction begins. But he said it's an easy business case to make."There's only maybe a half-dozen companies in the world that can make the equipment," Cox said."We need financing, not funding, because it pays for itself."These new projects have piqued the interest of investors. Cellcore covered the cost of its project through rounds of investment."One of the rounds we put out early on we had to shut off. There was that much investor interest in it," Brough said, "so we're extremely excited."The Saskatoon Star Phoenix has created an Afternoon Headlines newsletter that can be delivered daily to your inbox so you are up to date with the most vital news of the day. Click here to subscribe. With some online platforms blocking access to the journalism upon which you depend, our website is your destination for up-to-the-minute news, so make sure to bookmark thestarphoenix.com and sign up for our newsletters so we can keep you informed. Click here to subscribe. 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