Lithuania Defence Services to invest nearly €50 million in military equipment manufacturing

LDS, which is based in Jonava and specialises in the maintenance of military equipment, is entering a new phase of expansion. It will establish a factory in the Kaunas Free Economic Zone, where the most modern Leopard 2A8 tanks will be assembled. The Ministry of the Economy and Innovation has granted the project major investment status, which will ensure its faster implementation.

It is planned to invest around €50 million and create up to 80 jobs by the beginning of 2028.

The Ministry of National Defence, together with its international partners KNDS Deutschland and Rheinmetall Landsysteme, as well as representatives of the state-owned energy group EPSO-G, has signed a memorandum on industrial cooperation relating to the assembly of Leopard 2 A8 main battle tanks and the creation of maintenance infrastructure in Lithuania.

It is planned that 25.1% of the shares in Lithuania Defence Services (LDS), which are currently owned by KNDS Deutschland and Rheinmetall Landsysteme, will be transferred to EPSO-G Invest. The parties plan to agree on the specific terms of cooperation in 2026.

To ensure the fastest possible delivery schedule for the tanks and create conditions for developing Lithuania’s defence industry capabilities, it was agreed that some of the tanks would be assembled in Lithuania. LDS plans to construct a cutting-edge Leopard 2 A8 tank assembly plant in Lithuania. In turn, Lithuania undertakes to contribute to the development of the LDS production base, and has signed an additional agreement alongside the tank purchase agreement to ensure the combat readiness of the tanks.

This agreement marks a significant step in strengthening Lithuania’s defence capabilities. For the first time in history, some of the most modern NATO-standard battle tanks will be assembled in Lithuania, and the infrastructure being created will ensure their long-term technical readiness. This will strengthen the capabilities of our army while developing the country’s defence industry,” said Minister of National Defence Robertas Kaunas.

According to the Minister of Energy, Žygimantas Vaičiūnas, energy and national security are inseparable today. This planned investment is therefore another important step in strengthening Lithuania’s defence industry ecosystem and the country’s resilience.

Not only will LDS be responsible for assembling tanks in Lithuania, they will also be responsible for the long-term maintenance, repair and technical readiness of Leopard 2 A8 tanks and other Lithuanian military equipment. In the future, it is also expected that LDS will be able to provide services to the German brigade deployed in Lithuania and maintain a wider range of armoured vehicles from other countries.

The infrastructure necessary for the company’s expansion is planned to be established in the Kaunas Free Economic Zone (FEZ). LDS intends to invest around €50 million in the project and create approximately 100 new jobs.

Cooperating with KNDS and Rheinmetall will enable Lithuania to attract modern military technologies and strengthen the country’s resilience and defence potential.

In May 2024, Lithuania signed the LEOPARD 2 Cooperative Procurement Agreement (CPA) initiated by the German Federal Ministry of Defence. Alongside Germany, the Czech Republic and the Netherlands, Lithuania has expressed its intention to purchase the latest LEOPARD 2 A8 model main battle tanks, driver training tanks, combat support vehicles and the necessary simulation systems for crew training, together. This agreement enabled Lithuania to join the preliminary agreements concluded by Germany and purchase standardised combat equipment on the same terms.

Based on the LEOPARD 2 CPA agreement, a contract for the purchase of main battle tanks was signed in December 2024. Under the previous financing plan, the tanks were due to be delivered between 2029 and 2034. However, under the current agreement, which includes industrial cooperation, all tanks are to be delivered to the Lithuanian Armed Forces by 2030.