The ongoing war is running out of bullets, provoking worldwide munitions manufacturers to ramp up production.

Russia's war with Ukraine, ongoing since 2022, is driving an increased demand for copper.

Most munitions contain copper in some way, with bullet cartridges also being made of brass, a copper-zinc alloy.

"War is good for the metals business," Fastmarkets analyst Andy Farida said. "And part of the reason copper prices have been resilient, while the other base metals have not, could be due to increased demand from the ongoing war."

Restocking the war machine

Early on in the war, both countries drew from stockpiles of mostly Soviet-era military hardware, and as the prolonged conflict between Russia and Ukraine has dragged on, both sides have increasingly had to source new supplies from their international allies, eventually depleting the stockpiles in those countries as well.

With no end in sight, munitions factories around the world are ramping up production to restore diminishing stocks.

Bloomberg estimates that the U.S. produced, on average, 14,400 shells a month before the war in Ukraine. However, specialist defense industry publication Defense One said the country aims to increase output to 100,000 shells a month by the end of 2025, investing $5 billion to upgrade munitions factories, amounting to 1.2 million shells per year.

Today, Ukraine is capable of producing its own Soviet-caliber ammunition, such as 122mm and 152mm shells. In July of last year, the country produced nearly twice as many mortar and artillery shells as in the entire year of 2022, according to a Wall Street Journal interview with Ukrainian Minister of Strategic Industries and Industrial Policy Oleksandr Kamishin.

Kamishin emphasized that to achieve production rates capable of fully satisfying the country's current ammunition needs, their own military-industrial complex will require years. Additionally, Ukrainian forces are increasingly being equipped with Western artillery, which is pushing production toward the corresponding standard.

Cashing in at ground zero

In spite of the risks, an increasing number of global manufacturers of military equipment and munitions are considering building production capacity in the territory of Ukraine.

"Of course, any facilities for the production of weapons, especially if these weapons fire at us, they become objects of special attention for our military," said Dmitry Peskov, President Putin's press secretary.

Taking a page from corporations like Rheinmetall, BAE Systems, and Turkish drone maker Baykar, several American companies have also shown interest.

Baykar received licenses to manufacture combat drones in Ukraine in June 2023. According to the company's CEO, Haluk Bayraktar, the production of drones is set to begin in 2025, and the total investment into the project would amount to around $95 million.

The UK Ministry of Defense has awarded BAE Systems a contract to maintain and repair British-donated artillery guns in Ukraine. The contract was signed during Britain's biggest trade mission to Ukraine since before Russia's invasion.

Military demand for copper has also been a point of concern for the U.S. as well.

"Europe is rearming; Japan is rearming. The United States military is worried about a shortage of 155 mm howitzer shells," Mining magnate Robert Friedland told Bloomberg. "If someone is pointing a gun at you, you need that copper to shoot back."

A report from Dubai-based defense consultancy Simon Hunt Strategic Services estimated that 2021 global copper usage for military production was 2.19 million metric tons, representing 10.5% of total refined copper tonnage produced that year. The study also predicted military use of copper will increase by 14% per year until 2026, which would take it to 4.22 million metric tons.