$3 billion deal with UK gets Australia closer to having a fleet of nuclear-powered submarines

Australia is set to provide $3 billion to British industry to support the construction of nuclear-powered submarines and ensure its new fleet arrives on time

Australia is set to provide 4.6 billion Australian dollars ($3 billion) to British industry to support the construction of nuclear-powered submarines and ensure its new fleet arrives on time, the two countries said Friday.

The announcement came a day after the two countries signed a defense and security pact to better meet challenges such as China's increased activity in the South China Sea and South Pacific.

U.K. Defense Minister Grant Shapps said the submarine program was expensive but necessary.

“Nuclear-powered submarines are not cheap, but we live in a much more dangerous world where we are seeing a much more assertive region with China, a much more dangerous world all around with what’s happening in the Middle East and Europe,” Shapps told the Australian Broadcasting Corporation.

“Countries need to invest in making sure that adversaries see we are serious about our security, defending freedom of navigation, for example.”

The 10-year deal announced at an annual ministers' gathering will boost capacity at the Rolls-Royce factory in Derby, U.K., to build the nuclear reactors that will propel the submarines to be built by BAE Systems in Adelaide, Australia.

The Virginia-class submarines will be primarily from a U.K. design and will have a U.S. weapons system onboard.

Australia's Defense Minister Richard Marles said the agreement showed that the nuclear submarines program would be fulfilled and would create new production capability for the AUKUS partners, referring to the grouping of Australia, the U.K. and U.S.

“These are big foundational decisions which demonstrate that the pathway to Australia acquiring a nuclear-powered submarine capability under the banner of AUKUS is happening, and the result of that right here is going to be the most advanced manufacturing in the nation and one of the most advanced manufacturing production lines in the world,” Marles told reporters at the Osborne shipyard in Adelaide on Friday.

Australia is acquiring at least three U.S. nuclear submarines from the early 2030s under the AUKUS agreement.

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

“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.”