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Australia looks to retain sovereign share in ASC Shipbuilding

10 July 2018
BAE Systems will be obligated to ensure the development at ASC Shipbuilding during their joint programme to build Hunter-class frigates for the Royal Australian Navy. Source: Royal Australian Navy

The Australian government will retain a sovereign stake in state-owned ASC Shipbuilding during its programme with BAE Systems to build nine anti-submarine warfare frigates for the Royal Australian Navy (RAN).

Jane’s understands that the partnership could also include BAE Systems investing funds into ASC Shipbuilding in the Sea 5000 programme that will create about 4,000 jobs in Australia, with local companies expected to provide around two-thirds of total content.

In late June Canberra announced that BAE Systems’ 6,900-tonne Type 26 Global Combat Ship (GCS) had been selected for the AUD35 billion (USD25.9 billion) programme.

Prime Minister Malcolm Turnbull said at the time that the vessels, which will be known as the Hunter class, will be constructed by ASC Shipbuilding, a subsidiary of ASC Pty Ltd, located at Osborne on the outskirts of Adelaide, South Australia.

During the build programme, ASC Shipbuilding will become a subsidiary of BAE Systems, with the UK company to be fully responsible and accountable for the ships’ delivery. After construction is completed, Australia will resume full ownership of ASC.

Jane’s also understands that during the Hunter-class build programme the Australian government will retain a “sovereign share” while BAE Systems will be expected to manage the programme, guaranteeing a return to the government of intellectual property, a skilled workforce, and the associated equipment at the end of the project.

Under the Sea 5000 contract BAE Systems will also be contractually obligated to ensure that ASC Shipbuilding develops its ship design and construction capabilities by granting intellectual property rights, transferring key personnel, training the ASC workforce, and supporting the development of general know-how and expertise in ASC Shipbuilding.

In addition, BAE Systems will be expected to make “appropriate financial investments” in ASC Shipbuilding as required to deliver the Sea 5000 programme and position the Australian company as a sovereign naval shipbuilding entity capable of independently undertaking the design and construction of naval warships into the future.

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