Australia earmarks billions for naval infrastructure as BAE wins AUKUS submarine work

investing.com:

By Lewis Jackson

SYDNEY (Reuters) — Australia said Thursday it would spend billions on docks, shipyards and factories at home and in Britain for nuclear-powered submarines under the AUKUS security pact, and named Britain's BAE Systems (LON:BAES) to help build the boats.

The AUKUS agreement among Australia, Britain and the United States will see Australia buy up to five nuclear submarines from Washington in the early 2030s before jointly building and operating a new class, SSN-AUKUS, with Britain, roughly a decade later.

The pact, which will see Australia become the seventh nation to operate nuclear-powered submarines, will stress shipyards in Britain and the United States that are already beset by delays and cost overruns.

To help alleviate the strain, Australia will give Britain 2.4 billion pounds ($3.1 billion) toward design work on the conventionally armed SSN-AUKUS and expanding a Rolls-Royce (OTC:RYCEY) plant that builds nuclear reactors for submarines.

Australia has already agreed to invest $3 billion in U.S. shipyards, which build the Virginia-class nuclear submarines it will be sold early next decade amid concerns that a backlog of orders could jeopardize the deal.

«What AUKUS is doing is allowing Australian industry to further invest here, but there are opportunities also opening up with our UK and US partners,» Defence Minister Richard Marles said in a statement on Thursday.

Australia will also invest A$1.5 billion ($993 million) to prepare a naval base in Western Australia for nuclear submarines, in particular a U.S. and British force set to be based there part of each year starting in 2027. The total cost of the work is expected to be about A$8 billion.

The Australian and British foreign and defence ministers