In the video, an Islamic State official, who presumably runs the facility, discusses the factory before the video cuts to the factory itself. In this part of the video, mortars are clearly shown being manufactured. Along with the mortars, shells are also shown being manufactured. These shells vary in size from rather large to regular sized mortar shells.
Syrian rebel groups, including the al Qaeda affiliate Jabhat al Nusrah, are known to operate weapons factories in rebel held areas in Syria. The Islamic State is known to operate weapons factories in both Syria and Iraq. The factory shown in the video is relatively close to the Iraq capital of Baghdad.
The Islamic State, like other groups, are able to internally develop weapons to use in the fighting in Syria as well as Iraq.