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Britain’s defense sector has received a major boost after two industrial giants were chosen to build Australia’s next-generation nuclear submarines.
BAE Systems and Rolls-Royce have been chosen by the Australian government alongside national defense company ASC Pty and will deliver the SSN-AUKUS submarines in the early 2040s.
The ships are to be used by the Royal Australian Navy and will be the “largest, most powerful and most advanced” attack submarines ever deployed.
The deal is part of the AUKUS defense pact, a trilateral agreement between the UK, US and Australia signed in 2021 aimed at curbing Chinese military expansion in the Asia-Pacific region.
BAE will design the submarines, while the nuclear reactors will be developed by Rolls-Royce.
At the antipodes: BAE Systems and Rolls-Royce have been chosen to build Australia’s next-generation nuclear submarines
Under the project, Australia will give Britain £2.4 billion for design work and will also fund the expansion of a Rolls-Royce factory that builds underwater nuclear reactors at Derby.
BAE said the contract would create an additional 3,500 jobs over the next 15 years in the port town of Barrow-in-Furness, Cumbria, where the company’s submarine division is based. Rolls-Royce, meanwhile, will double the size of its Derby subsea facility, creating 1,170 jobs.
Defense Secretary Grant Shapps, visiting Australia, said the deal would create “security and prosperity for both our nations”.
He added: “In a more dangerous world, this agreement symbolizes the immense trust that our close partner Australia places in our leading defense companies such as BAE Systems and Rolls-Royce.”
The AUKUS deal was first agreed in 2021, with Prime Minister Rishi Sunak, Australian Prime Minister Anthony Albanese and US President Joe Biden subsequently announcing in March 2023 that the submarines would be designed by Britain.
A major pillar of the deal is a promise to help Australia build and acquire a fleet of powerful nuclear-powered submarines, one of the largest military upgrades ever.
Australia abandoned a previous deal to buy French ships as part of the deal, sparking a diplomatic row with Paris.
Nuclear-powered submarines are seen as key to countering Chinese aggression in the Pacific, due to their ability to operate quieter and stay underwater longer than their diesel-powered counterparts.
In a potential conflict over Taiwan, they are seen as key to containing China’s navy – in part because they could lie in wait at “choke points” along the island chain between Japan, the Philippines and China. Indonesia.
BAE Systems is on the rise and its shares gained 1.2 percent yesterday.
Activity benefited from increased global defense spending following Vladimir Putin’s invasion of Ukraine, while demand was also boosted by the Middle East conflict and interstate tensions -United States and China.
Similarly, shares of Rolls-Royce have soared under CEO “Turbo” Tufan Erginbilgic – who took over in January 2023 – going from strength to strength following the resumption of air travel.
Shares gained 3.3 percent.