Submarine plans to begin after $5b Australia-United Kingdom deal

Australia will spend more than $4.6 billion on a submarine nuclear reactor factory in the United Kingdom to ensure its new nuclear-powered fleet arrives on time.

The 10-year deal will boost capacity at the Rolls-Royce factory in Derby and bankroll the design costs of the boats that Australia will build.

Defence Minister Richard Marles and his UK counterpart Grant Shapps will confirm on Friday that BAE Systems will build the submarines at the Osborne shipyard in Adelaide.

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At least $2 billion has already been allocated to build a submarine construction yard at Osborne and at least $30 billion will go toward propping up Australia’s industrial base over the next three decades.

Marles remains confident the Virginia Class submarines will be ready by the early 2040s after visiting the Derby facility in 2023.

“We’re already seeing it readying itself to build the Australian reactors there,” he told ABC radio on Friday.

“There are parts that are being made right now which will be on the submarine that rolls off the production line in Osborne in the early 2040s.”

Australian Submarine Corporation will work with American and British firms to bolster its ability to sustain and operate nuclear-powered submarines.

Australia will acquire at least three US nuclear submarines from the early 2030s under the AUKUS agreement which includes the UK and US.

“This is not a normal procurement, we are not going off to a shop to buy an item,” Marles said.

“This is a partnership between three governments, which is intended to last forever, and a partnership which will involve the most developed industrial production line in our country.”

Shapps defended the costs, saying the complicated program would create thousands of jobs over decades.

“Nuclear-powered submarines are not cheap but we live in a much more dangerous world where we are seeing a much more assertive … China,” he said.

“We live in a much more dangerous world all around, with what’s happening in the Middle East and Europe, and countries need to invest in making sure that adversaries see that we’re serious about our security.”

Opposition leader Peter Dutton lauded the submarine deal and the AUKUS alliance, which was formed under the Morrison coalition government.

“It’s a great thing that the government has committed to undertaking AUKUS … it will underpin our security for generations to come,” he told Today.

“It makes us a safer country, which is a good thing.”

Australia will build the submarines in Adelaide but the nuclear reactors used for their propulsion will be built by Rolls-Royce in the UK, as foreshadowed.

The submarines will be built from a UK design with input from the AUKUS nations and will have a US weapons system embedded.

Pilot programs include non-destructive testing traineeships to boost the number of testing technicians, welding and fabrication initiatives and international placements.

The UK defence and foreign ministers are in Australia this week for talks with their government counterparts as part of an annual AUKMIN gathering

The two-on-two meeting will take place in Adelaide.