British defence firm BAE Systems sets up Ukrainian base

British defence company BAE Systems (BAES.L) said on Thursday it had set up a local entity in Ukraine and signed deals with the government there to help ramp up Kyiv's supply of weapons and equipment.

The move will enable BAE to work directly with Kyiv to explore potential partners for a plan to ultimately produce 105mm light guns, a kind of artillery weapon, in Ukraine, and to better understand Ukraine's capability requirements.

As the UK's biggest defence contractor, BAE has manufactured much of the equipment that Britain and other governments have provided to Ukraine as it fends off Russia's invasion.

Britain is a key defence supplier for Ukraine and in May became the first country to start supplying Kyiv with long-range cruise missiles.

"The best weapons that are currently helping our warriors defend Ukraine should be produced in Ukraine," Ukrainian President Volodymyr Zelenskiy wrote on X, formerly Twitter, following a meeting with BAE Chief Executive Charles Woodburn.

"The development of our own weapons production is a top priority," he said.

Zelenskiy had said in May the two sides were working on opening a BAE office in Ukraine.

Kyiv is eager to boost its arsenal, from drones and munitions to tanks, while also trying to boost job opportunities in an economy ravaged by war.

BAE, which has benefited from increased defence spending as a result of the conflict, is already providing training and repair services to Ukraine's armed forces.

"Signing the agreements and establishing a legal entity in Ukraine builds on our existing trust and support and paves the way for us to work together to provide more direct support to the Ukrainian armed forces," BAE's Woodburn said in a statement.

The announcement comes days after Ukraine signed a statement of intent with Sweden to strengthen cooperation in the production and operation of the CV90 family of armoured vehicles, made by a Swedish unit of BAE.

Western defence companies have been weighing opportunities to make weapons in Ukraine against the possible security risks, Reuters reported in June.