Hey there. All weapons have an Ammo Generation stat, regardless of the ammo they use. They all help to fill your Ammo Meters through final blows, the meters on your HUD. When the weapon uses special ammo, it contributes a little more to heavy ammo, and vice versa. Primary weapons contribute a little more towards both. That mod makes any kinetic weapon contribute a little bit more to the buildup of both bars than it normally would. The mod is not saying it 'generates kinetic ammo', it's increasing the 'ammo generation' property of a certain kind of weapon. Those weapons may not be generating ammo they themselves use.

Primary ammo is infinite. Kinetic ammo can still be used in kinetic special weapons.