Australia pledges $2.7 billion to progress nuclear submarine shipyard build

Australia said on Sunday it would spend A$3.9 billion ($2.76 billion) to progress construction of a shipyard that will help deliver nuclear-powered submarines under the trilateral AUKUS defence pact with the U.S. and Britain.

Announced in 2021, AUKUS is Australia's largest-ever defence investment and will see U.S.-commanded Virginia-class submarines based in Australia from 2027, several Virginia submarines sold to Australia from around 2030, and Britain and Australia building a new class of AUKUS nuclear-powered submarine.

Australian Prime Minister Anthony Albanese described the A$3.9 billion as a down payment to deliver the new shipyard in Osborne, a suburb of Adelaide in South Australia state.

"Investing in the submarine construction yard at Osborne is critical to delivering Australia's conventionally-armed, nuclear-powered submarines," Albanese said in a statement.

Official projections put the total cost of the build at A$30 billion "over coming decades", he said.

Osborne is where Australia's ASC and Britain's BAE Systems BAES.L will jointly build Australia's fleet of nuclear-powered submarines, the core component of the AUKUS pact. Until that work begins later this decade, the shipyard is where much of the maintenance is performed on the country's existing Collins-class submarine fleet.

South Australian Premier Peter Malinauskas said the down payment would be spent on building enabling infrastructure for the shipyard. "This is just the beginning," Malinauskas said in the statement.

In December, a Pentagon review of the AUKUS project found areas of opportunity to put the deal on the "strongest possible footing," including ensuring that Australia is moving fast enough to build its nuclear submarine capacity.

($1 = 1.4138 Australian dollars)

-Reporting by Sam McKeith in Sydney; Editing by Jamie Freed/Reuters