SYDNEY • The race between France, Germany and Japan to win a US$39 billion (S$52 billion) contract to build new submarines for Australia is reaching a climax.

Reports suggest that a decision could be made next week, and that Tokyo is all but out.

The Australian Cabinet's National Security Committee (NSC) met this week to weigh up the options from French shipbuilder DCNS, the Australian subsidiary of Germany's ThyssenKrupp Marine Systems, and the Japanese government- backed consortium led by Mitsubishi Heavy Industries.

Australian Prime Minister Malcolm Turnbull said a decision "will be made... shortly" but he declined to elaborate. The NSC's findings will go to the Cabinet amid unconfirmed reports of an announcement next week.

The Australian newspaper reported that the Japanese bid was considered the weakest and the French "the strongest". After a year as the favourite, Japan has now been virtually eliminated from the contest, reported the Wall Street Journal.

Tokyo's bid was considered a "considerable risk", given the lack of experience in building naval materiel abroad, the daily said. It added that ThyssenKrupp is emerging as a front runner. That leaves Japan considering a last-ditch intervention at the highest level to try to rescue its flagging bid, the Australian Broadcasting Corporation reported yesterday.

Shipyard jobs have become a political issue in Australia amid fears that any off-the-shelf submarine purchase could kill off the domestic shipbuilding industry.

All three bidders said they will build a large part or all of their submarines in Australia.

Canberra is seeking to replace its diesel and electric-powered Collins Class submarines, which will be retired from about 2026.

The new generation of subs are expected to offer superior sensor performance and stealth capabilities, besides matching the range and endurance of the Collins Class vessels.

AGENCE FRANCE-PRESSE