Peter Thiel Has a New Venture: Explosives for Pentagon's New Drones

A chemical company backed by Peter Thiel is entering the military explosives market, testing a material intended to fill a supply gap that threatens the Pentagon’s planned expansion of attack drones.

Odin Energetics brings together Solugen, whose largest investor is Thiel’s Founders Fund, and warhead developer Kraken Kinetics.

The partners announced this month that they have committed $115 million to the venture.

During recent trials outside Houston, Odin detonated an explosive that it says delivers 30% more power than the material currently carried by military drones, according to The Wall Street Journal.

The company argues that more explosive energy could make small weapons more destructive and offset less accurate strikes.

The tests come as Washington seeks millions of drones while struggling to secure enough explosives for existing weapons and depleted reserves.

Fighting in Ukraine has absorbed European supplies, while the war with Iran has placed further demands on U.S. stocks.

A New Market for Explosives

The Pentagon’s $1.1 billion Drone Dominance program aims to build up inexpensive drones by the end of 2027.

Nearly all of the 60,000 attack drones it recently committed to purchase are intended to carry explosives, according to a department official.

That creates a manufacturing burden different from the military’s longstanding reliance on smaller quantities of costly precision weapons.

Drones deployed in large numbers require a corresponding supply of expendable munitions.

“There’s this whole new way of warfare that was never budgeted for from a manufacturing perspective,” said Brian Davis, Odin’s co-founder and chief executive of Kraken Kinetics.

Odin says it could begin limited military deliveries next year. Its executives said the Army is discussing advanced explosives with the company, while the Pentagon’s Office of Strategic Capital has held talks about potential financing.

Those discussions have not yet resulted in an announced funding agreement or supply contract.

Production Near the Customer

Odin’s business model centers on modular plants that it says can be constructed within six months and located near military bases, testing grounds, or areas of operations.

Solugen supplies precursor chemicals, with the explosive produced at Odin’s facilities.

Executives say this approach reduces the need to transport and stockpile large quantities of finished explosives, addressing safety risks that have repeatedly disrupted conventional plants.

The company says its existing production capacity is equivalent to almost one-tenth of Holston Army Ammunition Plant’s annual output of roughly 11 million pounds of HMX and RDX.

That would add capacity to a market where buyers face delivery waits of one to two years for Holston products, according to industry experts.

An Aging Industrial Base

The U.S. explosives industry expanded rapidly during World War II, then contracted over subsequent decades. Government plant closures in the 1990s left Holston as the sole domestic producer of HMX and RDX.

The 84-year-old facility now produces about 3% of its 1944 peak, according to research by Tyler Hacker of the Center for Strategic and Budgetary Assessments.

It has also suffered explosions and pollution violations.

BAE Systems, which operates the Army-owned plant, directed questions to the service.

A $1 billion modernization program has slipped from an expected 2025 completion to 2029 or later.

Army spokeswoman Ellen Lovett said the revised schedule reflected safety and technical requirements.

The Army also announced a $903 million Kentucky research facility in March intended to help expand HMX and RDX production before 2031.

The Pentagon has established an energetics office and a panel charged with doubling supplies of key weapons, including their explosives.

Limited Alternatives Abroad

Imports offer little immediate relief. European producers are supplying Ukraine or retaining output for national rearmament, while restrictions have curtailed some ingredients previously sourced from Russia and China.

The squeeze also complicates U.S. preparations for a possible conflict with China, which depend on rebuilding reserves and reducing foreign supply dependencies.

For Odin, the opportunity rests on whether a new production model can expand supplies faster than the established industrial base.

“We are not suddenly in an energetics crisis. We have actually been in an energetics crisis for 20 years,” Davis said.