SYDNEY • Australia yesterday awarded a A$35 billion (S$35.3 billion) contract to build a new generation of warships to British defence giant BAE Systems, as it undertakes an ambitious naval programme in part to counter China.
The lucrative deal is a major boon for London-listed BAE, which has struggled in recent years with shrinking government defence budgets and slowing demand for the Eurofighter Typhoon jet.
BAE's Global Combat Ship, to be officially known as the Hunter class, beat competition from Italy's Fincantieri and Spain's Navantia SA and will be supplied to the Royal Australian Navy under the terms of a 30-year contract.
The nine new frigates will be "the most advanced anti-submarine warships in the world" and underpin the country's security for decades to come, said Australian Prime Minister Malcolm Turnbull. "The Hunter class will provide the Australian Defence Force with the highest levels of lethality and deterrence our major surface combatants need in periods of global uncertainty."
A key element of the contract was that a high level of construction must take place in Australia, in a bid by Canberra to boost domestic job numbers in the ship-building industry. The nine Type 26 submarine Hunter ships will be designed by BAE and built using Australian steel by the government-owned ASC Shipbuilding in Adelaide, with 4,000 jobs created.
British Prime Minister Theresa May hailed the deal as a boost for Britain's post-Brexit prospects. "We have always been clear that as we leave the EU we have an opportunity to build on our close relationships with allies like Australia."
The vessels will replace Australia's current nine Anzac class frigates, with the new ships equipped with a long-range cutting-edge missile defence system to counter threats from rogue states like North Korea.
They are due to enter service in the late 2020s as the backbone of the Australian Navy's fleet, part of the nation's largest peacetime naval investment that also includes 12 new submarines and 12 offshore patrol vessels.
The increase in spending comes as Beijing flexes its own muscles in the region through a military build-up in the contested South China Sea, and as countries keep a wary eye on nuclear-armed Pyongyang. "We need to have the capabilities to defend Australia, regardless of what may come," said Mr Turnbull.