BAE Systems wins £20bn contract to build nine Australian frigates
UK defence giant BAE Systems has won a 35bn Australian dollar (£20bn) contract to build frigates for the Australian navy, seeing off rival bids from Spain and Italy.
Australian media broke the news on Thursday afternoon ahead of a planned announcement by ministers in the UK.
Australian Prime Minister Malcolm Turnbull is to confirm BAE System’s victory on Friday in what will be seen as a significant boost to British manufacturing.
BAE beat Italy’s Fincantieri and Spain’s Navantia in the race for the contract.
The nine new Hunter class frigates will be built in Adelaide and come into service from the late 2020s, replacing the current Anzac class frigates.
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Turnbull will officially announce the deal on Friday alongside Australia’s defence minister Marise Payne and defence industry minister Christopher Pyne.
“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,” Turnbull said.
BAE will be put in charge of Australian state-owned shipbuilder ASC Shipbuilding in Adelaide for the duration of the building process, with ASC Shipbuilding becoming a subsidiary of BAE.
“This ensures BAE Systems is fully responsible and accountable for the delivery of the frigates and ensures the work will be carried out by Australian workers and create Australian jobs,” Turnbull said.
The frigates will specialise in anti-submarine warfare. Half of the world’s submarines are expected to be in the waters between the Pacific Ocean and the Indian Ocean by the 2030s.
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The UK’s International Trade Secretary Liam Fox hailed the contract as a sign of the strong trading relationship between the UK and Australia.
“The UK and Australia already enjoy a strong trading relationship worth more than £13bn a year. Today’s announcement is a further boost to this relationship which will create significant opportunities for companies in both countries to deepen their trading ties,” he said.
BAE’s Type 26 Frigate, which will provide the basis of the Australian Hunter class design, can support anti-submarine warfare, air defence and general purpose operations.
BAE’s share price closed up 1.25 per cent on Thursday after the news broke.
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