Japan wins $10 billion bid to build Australian Navy’s frontline warships and replace Anzac-class fleet

Australia has picked Japan over Germany to build the Navy’s new fleet of frontline warships in a decision that will shape the Australian Defence Force’s capabilities as it counters a strategic challenge from China’s military build-up.

The move has been hailed as the “biggest capability acquisition decision” since the AUKUS nuclear-powered submarine program, but security experts and the Coalition warn the Government and defence industry now face a race against time to acquire and manufacture the new fleet to keep pace with rising regional threats.

The upgraded Mogami-class frigate by Japanese shipbuilder Mitisubishi Heavy Industries won a tightly fought bid against the German MEKO A-200 by Thyssenkrupp Marine Systems in what Defence Minister Richard Marles said was a “very significant moment” in the bilateral relationship with Tokyo.

“Our relationship with Japan is growing from strength-to-strength. There is no country in the world with whom we have a greater strategic alignment,” Mr Marles said.

But he stressed that opting for the Mogami-class was purely a “capability-based decision” after a clear assessment that it was the best platform for Australia.

“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,” said Mr Marles.

Euan Graham, a senior analyst with the Australian Strategic Policy Institute (ASPI), said that in capability terms, the Mogami-class was the “clear favourite” from the start.

“From what I’ve heard from inside the Navy, there was no contest when it came to looking at it as a fighting ship,” he said.

But Dr Graham also argued that the interoperability of the Japanese and Australian platforms would act as a “deterrent signal” to potential adversaries in the region.

“Just the fact that there is a much closer collaboration at the strategic industrial level sends a signal that these countries can’t be picked off one by one,” he said.

Under the plan unveiled by the Government on Tuesday, the first three general-purpose frigates will be constructed in Japan, followed by another eight in Australia to replace the nation’s ageing Anzac-class vessels.

The new fleet will modernise what Mr Marles described as the “oldest service combatant fleet that the Navy has been operating since the end of the Second World War.”

Mr Marles and Defence Industry Minister Pat Conroy insisted the Government had acted on the basis of cost-effectiveness to obtain the “best platform” in a timely manner to fill capability gaps identified by the Strategic Defence Review during Labor’s first term in office.

“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,” said Mr Marles.

The initial costs of the program are projected to reach $10 billion over the next decade to deliver at least the first three vessels by 2034 and prepare the ground for acquiring and building the full fleet of eleven.

The Government has not publicly disclosed full budget estimates as it enters the next negotiating stage of the procurement process with a view to entering into binding, commercial contracts with Mitsubishi Heavy Industries and the Japanese government in 2026.

Financial considerations are understood to cover a range of costs from the vessels and required weaponry to upscaling the workforce and industrial capacity.

Japan’s bid was deemed to have been the most cost-effective after a rigorous and competitive tender process that also took into account its vessels’ longer life span and capacity to remain at sea for 300 days a year compared to the German ship’s 100.

The winning frigate, which is already in service in the Japanese Maritime Self Defence Force, is a next generation vessel with a range of 10,000 nautical miles – 4000 further than Australia’s Anzac-class fleet.

“It has a highly capable radar, a highly capable sonar. In that sense, it is genuinely a general-purpose frigate capable of engaging in air warfare and undersea warfare,” said Mr Marles.

The upgraded Mogami-class carries a 32 Cell Vertical Launch System and is fitted with surface-to-air and anti-ship missiles. When operational, it will allow Australian general purpose frigates to be able to fire 128 air defence missiles, up from 32.

The vessel also carries a crew of 90, compared to the 170 currently required for the Anzac-class.

“It’s a much bigger ship which is able to operate with a much smaller crew, and that’s a reflection of how modern this ship is,” said Mr Marles.

Mr Conroy said that “in terms of cost, capability, of meeting our schedule of delivery, the Mogami-class frigate was the clear winner.”

He added that it was the only option that met the Government’s timeline of the first frigate being delivered in 2029 for service in 2030 and was also considered to best meet the operational needs of Australia’s regional environment.

Mr Conroy expressed “great confidence” in the timeline, which the Government said would result in the Navy receiving its first new surface combatant five years earlier than the former Coalition government planned.

He added that a strategic shipbuilding agreement with Austal Limited, also announced on Tuesday, would secure a continuous pipeline of shipbuilding work and create thousands of jobs at the Henderson precinct in Western Australia.

The frigate decision would “transform our Navy into a more lethal and bigger navy. This will reassure our allies, deter our adversaries, and make Australia safer,” he said.

The Coalition welcomed the announcement but demanded Labor “get moving” to get the frigates in the water as soon as possible to avoid critical gaps in capabilities.

“Labor must progress works at Henderson immediately to ensure the precinct and workforce are prepared to build Australia’s general purpose frigates locally,” said acting shadow defence minister Andrew Hastie.

Dr Graham said that Henderson was behind schedule under a “crawl, walk, run schedule of construction,” and warned that Australia’s ability to respond to a regional crisis in the immediate term was “in a bad place” as the aging Naval fleet would shrink before it grew.

Jennifer Parker, a maritime security specialist who served for more than 20 years with the Royal Australian Navy, agreed that while the decision was “historic” there was a significant strategic challenge with the timeframe of acquiring the new fleet.

“We can’t afford to let it be delayed in any way, shape or form,” she said.

“Our Navy is on its knees in terms of its current capability. Operational availability is low because the Anzacs are old and have been run harder than they should have been,” she said.

“We’re meant to be going down to nine ships from next year, and so we’re in our most strategically significant circumstances with our least capable Navy.”

Ms Parker also cautioned Australia should not underestimate Japan’s lack of experience in exporting such complex vessels.

The Government has spruiked the speed of the decision-making process, which comes months ahead of schedule but concerns remain about Australia’s capacity to build the required workforce on time.

“It may be a very quick acquisition decision, but we haven’t actually acquired anything yet,” said Tom Corben is a Research Fellow in the Foreign Policy and Defence Program at the United States Studies Centre.

“This will be a test of Japanese industrial capacity in the first instance because we will need to up skill and up capacity in Australian shipyards, if we’re ever going to build components or even the majority of the ships here in Australia. That’s a longer term project,” he said.