New fleet of eight nuclear submarines to be built in Australia in $368 billion deal

Key points

  • Australia will build a new fleet of eight nuclear-powered submarines in Adelaide to begin service in the 2040s.
  • The government expects the full cost of the program, including construction and maintenance and service, to range from $268 billion to $368 billion over the life of the program to 2055.
  • The United States Navy and the Royal Navy will station nuclear-powered submarines in Perth from 2027 in the first step toward filling the capability gap. 
  • Australia will buy between three and five Virginia-class nuclear-powered submarines from the United States at a cost of $50 billion to $58 billion, which are expected to arrive from the early 2030s. It is not yet decided if these will be new or older submarines.
  • Australia’s own SSN-AUKUS nuclear-powered fleet will be based on Britain’s Astute-class submarines, and will be built in Adelaide from the 2040s. The first one may be built in the UK. 

San Diego: Australia will build a new fleet of eight nuclear-powered submarines in Adelaide to begin service in the 2040s under a mammoth transformation in national defence that will cost up to $368 billion by 2055.

The government expects the full cost of the program, including construction and maintenance and service, to range from $268 billion to $368 billion over the life of the program to 2055.

Australia will build a new fleet of eight nuclear-powered submarines in Adelaide at a cost of up to $368 billion by 2055.Credit:Fairfax Media

The sweeping plan will begin by hosting more visits to Australian ports by United States submarines this year and United Kingdom vessels from 2026, clearing the way for a fixed rotation of naval power in Perth.

Over time, Australia will aim to build a new fleet of nuclear-powered submarines to a joint design with the United Kingdom so that vessels made in Adelaide can enter service in the 2040s.

The long-term fleet, made in Australia with a design called the SSN-AUKUS, will consist of eight submarines and will be fitted with vertical launch systems to fire cruise missiles.

Upfront costs

The next steps in the AUKUS alliance with the US and UK will cost $9 billion over the next four years including $2 billion for infrastructure in Adelaide and $1 billion for an expanded naval base in Perth.

Australia will contribute about $3 billion to the efforts in the US and UK to develop the submarine technology, including the design and development of the SSN-AUKUS.

The US will commit $US4.6 billion to its industry to support the Australian project, while the UK will spend 2.2 billion pounds.

With the government setting out a two-decade effort to develop the industrial capacity to build the new fleet in Australia, it will commit to hosting more foreign vessels and buying US-made submarines to fill a looming gap in the nation’s defences.

While US submarines already visit Australia, the visits will increase from this year and Royal Australian Navy personnel will begin serving with the US and UK fleets.

The United States Navy and the Royal Navy will station nuclear-powered submarines in Perth from 2027 in the first step toward filling the capability gap. The rotational forces will include up to four Virginia-class US vessel and one Astute-class UK vessel.

Bridging the capability gap

From the early 2030s, the federal government will buy at least three and up to five Virginia-class submarines from the US, but this will depend on approval from the US Congress.

The result will give Australia an interim fleet with more capability and firepower than any Australian vessels to date, giving the country more capacity to project force throughout the region.

The three or more Virginia-class vessels will be under Australian command with Australian crews and will mark the first time the US has sold these submarines to another country.

The US and Australian governments are yet to decide whether Australia will buy new or used Virginia-class vessels.

Later in the 2030s, the UK will take delivery of new submarines from shipbuilders in the UK to a new design to replace the Astute-class and to be known as the SSN-AUKUS.

Only after this point is Australia forecast to have the shipbuilding and technology capacity to deploy the SSN-AUKUS design with vessels built in Adelaide and due to enter service in the 2040s.

The plan forecasts the delivery of a new SSN-AUKUS every two years and assumes all are built in Adelaide, but the government is not ruling out buying the first of this fleet from the UK, depending on the strategic outlook.

Prime Minister Anthony Albanese is due to announce the new steps alongside US President Joe Biden and UK Prime Minister Rishi Sunak at the US Navy’s Point Loma base in San Diego at 8am on Tuesday morning, AEDT, in the most significant decisions since the three nations struck the AUKUS agreement in September 2021.

All the submarines in the new plan will be powered by nuclear propulsion systems made overseas and fitted with nuclear fuel that will last the lifetime of the vessel, in the first time the US has shared the technology with another country since it agreed to do so with the United Kingdom in 1958. None of the submarines in the Royal Australian Navy will have nuclear weapons.

The new plans mark a major new step in the AUKUS pact after the intensely controversial move by then prime minister Scott Morrison and federal cabinet in September 2021 to end an agreement with France to supply conventional submarines to be built in Adelaide.

Albanese will set out a deadline for the Adelaide shipbuilding project that is in line with Morrison’s assurance that Australia would build its own submarines for delivery during the 2040s, a target that triggered argument over whether it would take too long to replace the Collins-class fleet, which are powered by diesel-electric engines and entered service from 1996.

The RAN has sought a dramatic shift to a more powerful submarine design out of concern at the vulnerability of the Collins-class vessels in an era of more powerful satellite surveillance and the limitations of diesel-electric engines compared to nuclear propulsion systems that can power vessels for greater distances at faster speeds and with less noise and exposure to detection.

Searching for the next generation of submariners

The need for skilled workers has been identified as a key challenge in the AUKUS project because of the scale of the construction as well as the shortage of submariners on the existing Collins-class submarine fleet before personnel move to the nuclear-powered fleets.

The government expects to need 20,000 jobs over the next 30 years including workers supporting AUKUS in the Australian Defence Force, domestic industry and the Australian public service. This includes 8500 direct jobs in Australia’s building and servicing the submarines, with jobs including scientists, engineers, project managers, operators, technicians, welders, construction workers, electricians, metal fitters and builders.

Albanese has preciously named Adelaide and Western Australia as two locations that would win work from the AUKUS project.

The $9 billion cost over the next four years will include $6 billion for Australian industry and workforce, separate from the infrastructure upgrades in Adelaide and Perth.

Overhauling our shipyards and ports

HMAS Stirling in Perth will be upgraded to host more visits by US and UK vessels and become the base for the new fleet, in a plan that assumes the creation of 3,000 jobs.The plan for Adelaide requires a mammoth investment in a new shipyard at Osborne to build the SSN-AUKUS, with up to 4,000 workers involved at its peak.

In addition, the construction of the new submarines will require 4,000 to 5,000 workers at the shipyard at the peak of the work two decades from now.

The government estimate for the decade to 2033 ranges from $50 billion to $58 billion and could include some of the cost of buying the first Virginia-class vessels in the next decade.

The cost is at least twice that of the $24 billion for the Attack-class submarines under the contract cancelled with the French.

Over the longer-term, the project will cost 0.15 per cent of GDP each year on average, highlighting the vast cost when total defence spending is forecast to surpass 2 per cent of GDP.

Australia has 900 serving submariners but needs at least 200 more as soon as possible so it can deploy personnel to US and British vessels to prepare for the transformation in the fleet. Over time, however, many more would be needed, depending on the number of submarines purchased.

The plan to be unveiled commits Australia to using propulsion systems from the US that are installed in the submarines with a supply of nuclear fuel that lasts the lifetime of the vessels, avoiding the need for a civil nuclear industry.

The nuclear reactors are to be inserted into the submarines during their construction, resulting in a fully self-contained power source with no need for refuelling – a crucial assumption in the AUKUS agreement because it means Australia would not need a civil nuclear industry to support the maintenance of the vessels.

A transformation in regional defence that will require at least $170 billion in new spending to develop an industrial base capable of building a new fleet in Adelaide over the next two decades.

The government will not disclose the cost per unit for the new submarines.

The program assumes the government will not begin the disposal of any nuclear waste until the 2050s and the government is looking for a future site for this on Australian Defence Force land at a future date.

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