Australia is spending $640 million on naval supply ships made in Spain

The Navantia-built HMAS Canberra. Photo: © Commonwealth of Australia/Department of Defence

The Turnbull government’s massive spend on Australia’s naval capability continued today after signing a deal to spend $640 million on two naval replenishment ships built in Spain .

Unlike recent announcements by the prime minister about building submarines and other ships in Australia, today’s decision to give the contract to Madrid-based Navantia was low key.

Defence minister Marise Payne confirmed Navantia as the preferred tenderer, beating South Korea’s Daewoo, for the two auxiliary oiler and replenishment (AOR) vessels in March, and with the prime minister set to call the election this weekend, the government signed the deal today before going into caretaker mode.

The minister said Australia’s current supply ship, HMAS Success, launched in 1984, will reach its end of life in 2021, and needs to be replaced urgently, a fact identified in defence white papers in 2007 and 2013.

The navy’s other supply ship, HMAS Sirius, is a former commercial oil tanker commissioned in 2006 and does not have the capability for other supplies. Navantia, which build the Royal Australian Navy’s two newest vessels, the landing helicopter dock ships, Canberra and Adelaide, will build two 19,500-tonne dual tanker and supply ships.

The contract stipulates that $130 million of the build will involve local industry for combat and communication systems, and elements of the onboard cranes. And an initial $250 million, five-year sustainment contract, also signed with Navantia, will be undertaken in Australia.

News of the deal comes as the government-owned Adelaide shipbuilder ASC announced 640 jobs will go by the end of the year as work of the air warfare destroyers winds up. Last month the Turnbull government said work on Australia’s new offshore patrol vessels will start in Adelaide before moving to Western Australia in an effort to preserve jobs in the state.

The prime minister defended the decision to give the contract to the Spanish builder today.

“These vessels will be manned, they’ll be maintained in Australia, there will be a very large Australian input to them,” he said.

The ships also come at 65% of the Defence dept estimate of $1 billion in 2012, and the deal is expected to see both boths delivered 12-48 months earlier than expected, with the first vessel arriving in 2019.

The latest commitment is part of a $90 billion naval defence spend announced by the Turnbull government over the past month, including 12 submarines, nine frigates and 12 offshore patrol vessels. The government also signed the $280 million deal to build 21 Pacific patrol boats in Western Australia today.

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