The accord was signed on the sidelines of the Munich Security conference by Ukrainian industry minister Alexander Kamyshin and Rheinmetall chief executive Armin Papperger.
For security reasons, the name of the local partner, the location of the factory and the start date of production weren't revealed.
The venture, to be held 51 percent by Rheinmetall and 49 percent by the Ukrainian partner, will bring a "significant contribution to Ukraine's defense capacity and will enhance Europe's security," Papperger said.
It will be Rheinmetall's second venture in Ukraine after one signed in October with state company UDI to repair military vehicles, a first step to eventually producing them.
And last Monday, groundbreaking began for a future munitions factory at a Rheinmetall industrial complex in the northern German town of Unterluss, with Chancellor Olaf Scholz in attendance.
This factory in 2025 will start producing NATO's standard 155-millimetre shells, used in numerous artillery systems, with an eventual output of 200,000 shells a year.
Rheinmetall wants to produce throughout its European plants up to 700,000 artillery shells a year in 2025, up from 400,000 to 500,000 this year, and 70,000 before Russia's invasion of Ukraine.
Ammunition shortage hurting Ukraine, Zelensky tells Munich meeting
Munich, Germany (AFP) Feb 17, 2024 -
A lack of long-range missiles and artillery shells is limiting Ukraine's fightback against Russia, President Volodymyr Zelensky told a defence conference on Saturday, making a fresh appeal for more weapons.
Later in the day, delegates at the conference also discussed the situation in Gaza, with some holding out slim hopes of a lasting solution to end the Israel-Hamas war.
Zelensky's call at the gathering of 180 leaders and defence chiefs at the Munich Security Conference comes at a critical juncture, with Ukraine's troops forced to withdraw from the frontline city of Avdiivka to avoid being encircled.
"Ukrainians have proven that we can force Russia to retreat," he said, adding that "our actions are limited only by the sufficiency and length of the range of our strength... (the) Avdiivka situation proves this.
"Keeping Ukraine in artificial deficits of weapons, particularly in deficits of artillery and long-range capabilities, allows Putin to adapt to the current intensity of the war."
With the war about to enter its third year, Ukraine is under mounting pressure over the ammunition shortfall.
The long-term future of Western aid is also in doubt, with a possible $60-billion package of military aid held up in Washington since last year because of wrangling in Congress.
Seeking to allay fears over US stamina in helping Ukraine, Vice President Kamala Harris said after talks with Zelensky that her country would not allow political brinksmanship to stand in the way of support to Kyiv.
"As it relates to our support for Ukraine, we must be unwavering and we cannot play political games," she said.
Zelensky said he believed in the "wise decision" of the US Congress and expressed gratitude for Joe Biden's "full support" following a telephone call with the US president.
In a White House statement, Biden blamed congressional inaction for Ukrainian soldiers having to ration ammunition and contend with dwindling supplies before their withdrawal from Avdiivka
- Israel-Hamas war in focus -
On top of the war in Ukraine, the conflict between Israel and Hamas has added to the concerns for the delegates gathered in Munich.
Speaking at the conference, Qatar's Prime Minister Mohammed bin Abdulrahman Al-Thani provided a gloomy assessment of talks to seek a ceasefire in the more than four-month-old Gaza conflict.
"The pattern in the last few days is not really very promising," said Al-Thani, whose country has played a key mediation role.
"Time is not in our favour", he warned, with the Muslim holy month of Ramadan set to begin on March 10.
Failure to reach a deal could lead to a wider escalation in the region, he warned, as hundreds of thousands of Gazans faced a dire humanitarian situation.
Some 1.4 million are squeezed into the southern city of Rafah, close to the border with Egypt, as Israel prepares a new incursion in the area.
The Gaza war began with Hamas's unprecedented October 7 attack which resulted in the deaths of about 1,160 people in Israel, mostly civilians, according to an AFP tally of Israeli official figures.
Militants also took about 250 people hostage, 130 of whom are still in Gaza, including 30 who are presumed dead, according to Israeli figures.
Israel's retaliatory assault on Gaza has killed at least 28,858 people, mostly women and children, according to the territory's Hamas-run health ministry.
The foreign ministers of Egypt and Saudi Arabia also underlined in Munich the catastrophic situation facing civilians in Gaza.
Diplomats seeking an end to the conflict said however that there may be a unique chance to end the cycle of violence in the next months.
- 'Extraordinary opportunity' -
Earlier in the day, US Secretary of State Antony Blinken said Israel had an "extraordinary opportunity" to normalise relations with almost every Arab nation, if the Gaza conflict came to an end.
Blinken, who has travelled several times to the Middle East since the war erupted, had been in talks with key figures in the region to seek a truce deal and "an enduring end" to the Israel-Hamas war.
There was however an "imperative to proceed to a Palestinian state -- one that also ensures the security of Israel", Blinken said in Munich.
Israeli President Isaac Herzog, who held talks with Blinken, urged Saudi Arabia to normalise ties with his country, saying that would be a win against Hamas.
Stopping efforts at normalisation that had been progressing before the war was among Hamas's aims when it launched its October 7 attack, he said.
"That is why moving on with Saudi Arabia will clearly be a victory over what Hamas did," he added.
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