- Ukraine’s DEMZ signed an investment agreement with Lithuania to establish a large-scale defense production operation across Alytus and Prienai
- The project is expected to create up to 450 jobs, with construction beginning in fall 2026 and production targeted for late 2027
- The facility will supply ammunition primarily to Ukraine while supporting allied requirements and deeper Lithuanian-Ukrainian defense industry cooperation
Ukraine’s Dnipro Energy and Mechanical Plant, or DEMZ, is planning a major defense manufacturing investment in Lithuania to establish a regional hub for ammunition production, testing and innovation. Lithuania’s Minister of the Economy and Innovation Edvinas Grikšas and a DEMZ representative signed the investment agreement for the project.
Construction is scheduled to begin in fall 2026, with production expected to start in late 2027, Lithuania’s Ministry of National Defence said Friday.
How will the facility support Ukraine and NATO allies?
The Lithuanian operation will manufacture defensive ammunition and related components using advanced European production technologies. Products manufactured at the facility are expected to meet NATO standards.
Ukraine’s armed forces will serve as the primary market for the production, while NATO allies will represent a secondary market based on their defense equipment requirements.
The Ministry of National Defence and DEMZ have also signed a memorandum to examine additional ways the new facility can support Ukraine. The project is expected to contribute to Ukraine’s ammunition supply while improving resilience across European defense supply chains.
“It strengthens Ukraine’s defensive capacity it needs today, while Lithuania gets the opportunity of growing its defense industry, building new competences and an even closer integration with the NATO supply chains,” said Robertas Kaunas, Lithuania’s minister of national defense.
Why is the DEMZ investment strategically important?
DEMZ plans to use existing industrial infrastructure at the Alytus Industrial Park while constructing a new, next-generation defense production facility in the Prienai district. The two locations will operate as a combined manufacturing network designed to increase production efficiency.
The company plans to collaborate with Lithuanian companies and scientific institutions on new defense products and manufacturing technologies. The project is expected to create as many as 450 positions, particularly for workers with experience in metalworking machinery, quality control and manufacturing processes.
“This investment will create hundreds of jobs, open new opportunities for the Lithuanian business and strengthen the competitiveness of our defense industry,” said Mindaugas Sinkevičius, the prime minister of Lithuania.
Minister of the Economy and Innovation Edvinas Grikšas said the investment reflects Lithuania’s economic development priorities and its growing role in the regional defense industry.
“The DEMZ investment is a testament to the security and capacity of Lithuania as a production venue, and moreover, as a country that actively shapes the future of defense industry in our region,” Grikšas added.
How does the DEMZ project fit into Lithuania’s broader defense buildup?
The DEMZ investment comes as Lithuania is simultaneously attracting other major defense manufacturers.
In January 2025, Rheinmetall formed Rheinmetall Defence Lietuva with Lithuanian investment firm EPSO-G Invest and ammunition manufacturer Giraitės ginkluotės gamykla. Rheinmetall holds a 51 percent stake in the venture, while EPSO-G and Giraitės ginkluotės gamykla hold 48 percent and 1 percent, respectively.
The Rheinmetall-led venture is overseeing the development of a 155 mm artillery-shell manufacturing facility in Baisogala eldership. The plant is expected to become operational in 2027 and create at least 150 jobs.
