Lewis Jackson
SYDNEY (Reuters) – Australia said on Thursday it will spend billions on docks, shipyards and factories at home and in Britain to build nuclear submarines under the AUKUS safety treaty, and called on Britain’s BAE Systems (LON:) to help build the boats .
The AUKUS agreement between Australia, the UK and the United States will see Australia buy up to five nuclear submarines from Washington in the early 2030s and then jointly build and operate the new SSN-AUKUS class with the UK about a decade later.
The pact, which would make Australia the seventh nation to operate nuclear submarines, would strain UK and US shipyards already plagued by delays and cost overruns.
To ease tensions, Australia will provide Britain with 2.4 billion pounds ($3.1 billion) to develop conventionally armed AUKUS submarines and expand the Rolls-Royce (OTC:) plant, which builds nuclear reactors for submarines.
Australia has already agreed to invest $3 billion in US shipyards that build Virginia-class nuclear submarines. They will be sold early next decade amid concerns that a backlog of orders could jeopardize the deal.
“What AUKUS is doing allows Australian industry to continue to invest here, but there are opportunities with our UK and US partners,” Defense Minister Richard Marles said in a statement on Thursday.
Australia is also investing A$1.5 billion ($993 million) to prepare a naval base in Western Australia to house nuclear submarines, with US and British forces to be based there for part of each year from 2027. The total cost of the work is expected to be around A$8 billion.
The Australian and British foreign and defense ministers will formally announce the investment on Friday at a joint press conference at the South Australian shipyards where Australia will build its AUKUS fleet.
Australia said BAE Systems has been selected to build the submarines in South Australia in partnership with local naval firm ASC.
Work is expected to begin in the late 2020s, following the completion of new shipbuilding facilities costing at least A$2 billion.
Once the submarines are in the water, ASC will handle maintenance and logistics. The firm, which builds and maintains Australia’s Collins-class diesel fleet, will work with unspecified US and UK companies.
SSN-AUKUS submarines will also be built in the UK, and BAE won a £4 billion ($5.1 billion) contract in October 2023 to begin design work and infrastructure at the Barrow-in-Furness shipyard.
Nuclear submarines require a specialized workforce and BAE and ASC will establish a joint center of excellence in South Australia to begin training personnel.
Australia plans to send about 100 ASC personnel to Pearl Harbor, Hawaii, next year for training at the naval facility there.
($1 = 0.7816 pounds)
($1 = 1.5110 Australian dollars)