Bidding for $52b Aussie submarine deal hots up

SYDNEY • Australia's new A$50 billion (S$52 billion) submarine fleet should be built entirely within Australia, ThyssenKrupp's shipbuilding unit said yesterday, making the German company the first bidder to publicly endorse domestic construction as the best option.

Germany is up against Japan and France for one of the world's most lucrative defence contracts. Each was required under the terms to provide three proposals for construction - entirely overseas, entirely in Australia and a combination of the two.

A decision on the politically sensitive contract is expected within months, ahead of an Australian national election in which the deal and the jobs it will create are expected to be a key issue for the conservative government.

"An all-Australian build is the best option for Australia as it offers the most efficient and lowest-cost approach," company chairman Hans Atzpodien said in Canberra. "It has become quite clear to us that Australia has the local engineering and technical skills as well as capacity to help build the new submarine fleet."

Competition for the deal has been narrowing to a race between Japan and France, sources have told Reuters, with Tokyo playing up its strategic support from Washington and Paris emphasising how its proposal would help Australia's slowing economy.

The German company is proposing to scale up its 2,000-tonne Type 214 class submarine, while Japan is offering a variant of its 4,000-tonne Soryu boats made by Mitsubishi Heavy Industries and Kawasaki Heavy Industries.

France's state-controlled naval contractor DCNS has proposed a diesel-electric version of its 5,000-tonne Barracuda nuclear-powered submarine.

Australia announced in a White Paper last month that it would increase defence spending by nearly A$30 billion over the next 10 years to protect its strategic and trade interests in the Asia-Pacific.

REUTERS

A version of this article appeared in the print edition of The Straits Times on March 18, 2016, with the headline 'Bidding for $52b Aussie submarine deal hots up'. Print Edition | Subscribe