In the dock at Newry Magistrates' Court were Keith McConnan, 19, and Orla O'Hanlon, 18, who both have an address at Tievecrom Road, Forkhill.
They were flanked in the dock by four PSNI officers and another four stood guard in the court as they were formally charged.
The defendants were both charged with making and possessing explosives with intent to endanger life or property between Sunday, 15 December and Wednesday, 18 December.
The pair arrived from the Serious Crime Suite in Antrim in a convoy of police landrovers while armed officers stood outside the courthouse for their first appearance.
A detective constable from the PSNI's Serious Crime Branch told District Judge Eamonn King that he could connect the pair to the charges.
The officer said they were arrested at a house on Tievecrom Road on Wednesday, 18 December under Section 41 of the Terrorism Act.
The court heard that while McConnan was being taken to Antrim police station, officers found a latex glove in his hip pocket.
"A search was carried out of the property and a box of latex gloves was also found,'' said the detective.
He told the court that in a walk-in wardrobe in a bedroom, officers found a timer power unit and ancillary items for the unit.
"This would enable a bomb to be placed which could delay the detonation for several days.''
The detective added that, in a bin, a white substance was discovered which was forensically tested and found to be ammonium nitrate which he said is used for "home made explosives or HME''.
He said that it appeared there had been an attempt at a clear up operation as similar white powder was found in a hoover in the hallway, although it has yet to be forensically tested.
In another bedroom, the court heard, police also found a three feet tall industrial coffee grinder.
"There was fine powder both inside and outside the grinder. This had the capacity to grind down 20kg of home made explosives per hour.''
The detective said that the coffee grinder had been supplied to McCannon's home address in Kilcurry, Dundalk, Co Louth.
During a follow-up search at the address, Garda detectives found a bag of glucose in his bedroom.
"The ammonium nitrate found in the house in Tievecrom Road is linked to the glucose in Kilcurry,'' he told the court, adding that the pair had only been in the house between four and and six weeks prior to the planned police raid.
The detective said that during 13 interviews, McConnan made no comment replies to questions from police.
However, he gave a prepared statement in which he said the latex glove found in his hip pocket had been used when he was putting oil into his oil tank.
But the officer said a receipt found for the oil dated back to 28 November this year, adding that it was unlikely he was filling the oil tank on the day of his arrest.
He told the court that O'Hanlon, during initial interviews, spoke openly to detectives about family and home life.
But when she was asked about the items recovered in the property, she refused to comment except to say that the industrial coffee grinder was used to grind down flour.
No applications were made for bail and District Judge King remanded them in custody to Hydebank Wood Young Offenders Centre in south Belfast.
They are due back in Newry Magistrates Court via video link on 8 January, 2014.