Rheinmetall to build EUR 180mn factory in Lithuania

Germany’s Rheinmetall will spend more than EUR 180mn on an ammunition manufacturing facility in Lithuania, the Lithuanian Economy and Innovation Ministry said. The production unit is expected to produce tens of thousands of rounds of ammunition per year.

Last week the Lithuanian economy and finance ministries said another EUR 250mn in preferential loans will be extended to the defence industry to grow the sector. Foreign companies without a presence in the country but who plan to invest in Lithuania will also be able to apply, Economy Minister Ausrine Armonaite said. “This will make it easier to attract high value-added projects and world-class companies from various sectors, which will create well-paid jobs and thus strengthen the Lithuanian economy,” she added.

Central Lithuania increasingly likely location

The plant, expected to create at least 150 jobs, could be built near Baisogala, central Lithuania, on state land currently leased by the Lithuanian University of Health Sciences, according to officials. Construction of the facility should commence in October, Deputy Transport and Communication Minister Julius Skackauskas said.

The project has been granted special strategic status, and the plant’s location will be announced in the upcoming weeks, under an investment agreement signed by Rheinmetall and Armonaite after almost a year of negotiations.

In April, Rheinmetall, Armonaite, and Lithuanian Defence Minister Laurynas Kasciunas signed a letter of intent for the construction of the plant, after negotiations with the German company were launched in August 2023. Lithuanian MPs adopted amendments in April to cut red tape for Western arms and ammunition makers who want to build production facilities in Lithuania.

In June Armonaite called the plant “a significant step towards meeting our country’s immediate defence and security needs… to ensure uninterrupted access to essential weapons and ammunition”. Rheinmetall Head of Strategic Programme Organisation International Maximilian Froch said “We are grateful to have been selected by Lithuania as a partner of the defence industry,” adding that “we are pleased to be able to make a contribution to national sovereignty in the field of ammunition”.

German arms maker upped sales by one-third in first half

Rheinmetall CEO Armin Papperger said: “We at Rheinmetall are very grateful for this long-term partnership with Lithuania. It confirms us once again in our claim to be one of the pillars of national and international security provision.” 

Rheinmetall announced in early August that it had increased its sales to EUR 3.8bn (USD4.15bn) in H1 of 2024, a 33% annual increase, as the group’s operating result grew 91% to EUR 404mn. The arms maker attributed its improved performance to orders from EU and NATO members, and military aid to Ukraine.

Papperger said Rheinmetall expects annual sales growth of around EUR 2bn in the coming years. “We invested early and have been following a strategic plan since 2014, when Crimea was invaded (and) massively expanded capacities, made acquisitions, and are now also additionally building new plants in countries like Lithuania, Hungary, Romania, and Ukraine,” he added.