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Czech defence group CSG plans ammunition venture in Ukraine

FILE PHOTO: Michal Strnad, Chairman and owner of Czechoslovak Group, poses for a photo in Prague

PRAGUE (Reuters) - Czechoslovak Group (CSG), one of Europe's biggest ammunition producers, is looking to set up joint ventures to invest hundreds of millions of euros in Ukraine to boost the country's defence capacities, CSG's billionaire owner said on Wednesday.

The ventures would focus on heavy ammunition and equipment, providing important technology and a way to ramp up production in the coming years, although not an immediate fix to Europe's drive to get more artillery rounds to Ukraine now, Michal Strnad told a group of journalists.

CSG has become an important supplier to Ukraine since Russia's full-scale invasion in 2022, delivering refurbished T-72 tanks along with ammunition, howitzers and other equipment.

Its business has soared with those supplies, along with a renewed focus in Europe on defence spending. Revenues hit 1 billion euros ($1.1 billion) in 2022, the latest year available.

The 31-year-old Strnad, who grew CSG after taking full ownership from his father in 2018, said the joint ventures (JV) would expand facilities for state-owned Ukrainian defence firms.

"We have two or three projects under discussion for JVs," he said at his Prague headquarters.

"The agreement will probably be done this year, but then two to three years (before production). If we have an agreement, we would transfer the technology for different calibres and different equipment."

Strnad said the deals would be similar to Rheinmetall's, a major German arms producer that said last month it would start joint production with Ukraine of 155mm-calibre artillery ammunition, which CSG also produces.

Artillery ammunition has become a pressing issue for Ukraine after two years of fighting. More countries have been signing up to a Czech government-led initiative to source hundreds of thousands of rounds from outside Europe for Ukraine.

"In terms of artillery and tank ammunition, you have in Europe very limited capacities," Strnad said.

CSG's tank and heavy equipment deliveries to Ukraine are mainly funded by other European Union or NATO countries. Strnad said the company had sent around 150 to 160 pieces of equipment this way since the war started.

"It will be more now because we managed to find another source, so are currently buying additional pieces that we will refurbish for them," he said, without giving details.

CSG started business in the mid-1900s when Strnad's father, Jaroslav, began collecting old tanks for scrap metal before realising there was a market in other countries, such as in Africa, for their parts or refurbishment.

($1 = 0.9173 euros)

(Reporting by Jason Hovet; Editing by Mark Potter)