Japan clinches landmark $6.5 billion warship deal with Australia to counter China
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1 of 2 Australian Deputy Prime Minister and Minister for Defence
Richard Marles looks on during his ceremonial reception, in New Delhi,
India, June 4, 2025. REUTERS/Anushree Fadnavis//File Photo
[1/2]Australian
Deputy Prime Minister and Minister for Defence Richard Marles looks on
during his ceremonial reception, in New Delhi, India, June 4, 2025.
REUTERS/Anushree Fadnavis//File Photo Purchase Licensing Rights - First three frigates to be built in Japan, rest in Australia
- First frigate expected to be delivered in 2029
- Mogami-class frigates capable of launching long-range missiles
SYDNEY/TOKYO,
Aug 5 (Reuters) - Japan clinched a landmark A$10 billion ($6.5 billion)
deal on Tuesday to build warships for Australia, marking Tokyo's most
consequential defence sale since ending a military export ban in 2014 as
it steps away from postwar pacifism to counter China.
Under the agreement, Mitsubishi Heavy Industries
(7011.T), opens new tab
will supply the Royal Australian Navy with three, upgraded Mogami-class
multi-role frigates built in Japan from 2029. Eight more frigates will
be built in Australia.
Designed
to hunt submarines, strike surface ships and provide air defence, the
highly automated warships can be operated by just 90 sailors, half the
crew of Australia's aging Anzac-class frigates.
Australia
plans to deploy the ships to defend critical maritime trade routes and
its northern approaches in the Indian and Pacific Oceans, where China's
military footprint is expanding.
"It's
going to be really important in terms of giving our navy the capability
to project, and impactful projection is at the heart of the strategic
challenge," Australian Deputy Prime Minister Richard Marles said at a
briefing.
The
Mogami, emblematic of a global shift toward versatile modular warships,
offers more firepower and a 4,000 nautical miles more range than the
current fleet.
"It
takes our general purpose frigates from being able to fire 32 air
defence missiles to 128," including "the most advanced", defence
industry minister Pat Conroy said at the briefing with Marles.
The deal also anchors Japan's push to forge security ties beyond its alliance with the U.S. to counter China.
The
defence industry partnership "makes it harder for China to play Japan
and Australia off against each other and sends a concerted signal to
Beijing that both countries are willing to make their quasi-alliance a
functioning reality” said Euan Graham, a senior analyst for defence
strategy at the Australian Strategic Policy Institute.
The
successful frigate bid eases the sting of 2016, when Australia rejected
a Japanese submarine program, also led by MHI, in favour of a French
design. Canberra scrapped that project in 2023, opting instead to build
nuclear-powered submarines with the United States and Britain under the
AUKUS pact.
"We
took that lesson to heart. The Australian government recognized not
only the technical strengths of our ships but also the unified
commitment of both government and industry," Japan's Minister of Defence
Gen Nakatani said at a briefing in Tokyo.
INITIAL CONTRACT
The
initial order for three Japanese-built frigates will be Australia’s
largest naval purchase since the AUKUS agreement, while the remaining
eight ships are expected to be constructed by Austal
(ASB.AX), opens new tab in Western Australia.
"We
are currently focusing on establishing maintenance operations in
Australia for the ships built here and are beginning communication with
local companies," Hiroshi Nishio MHI’s chief financial officer, said
after the company released its latest quarterly earnings.
However,
with Japan's biggest defence contractor untested in managing overseas
military projects, MHI will tap other business units to support the
work, Nishio added.
Officials
from both countries said pricing, sustainment, and the transfer of
production to Australia remain key issues to settle before a finalized
contract can be signed early next year.
MHI's Mogami frigate was selected over German company ThyssenKrupp
(TKAG.DE)Reporting
by Kirsty Needham and Alasdair Pal in Sydney; Tim Kelly in Tokyo;
Editing by Stephen Coates, Michael Perry, Lincoln Feast and Kim Coghill