Victoria and Korean manufacturer fight Queensland for $27b defence contract

Victoria and Korean manufacturer fight Queensland for $27b defence contract

January 12, 2021

The Victorian government has signed a memorandum of understanding with Korea's largest defence manufacturer on building armoured vehicles in Geelong from next year, escalating efforts to beat a Queensland-backed bid for an Australian military contract worth up to $27 billion.

Trade Minister Martin Pakula and Hanwha Australia managing director Richard Cho in front of Hanwha’s Redback vehicle on Tuesday.Credit:Wayne Taylor

The agreement marks a step up in the battle between Victoria and Queensland to secure the phase three tender, worth between $18 billion and $27 billion, for the Land 400 armoured vehicle, which the federal government will finalise in the second half of this year before manufacturing begins in 2022.

Queensland Premier Annastacia Palaszczuk’s government committed $170 million last year to open a facility near Brisbane that German company Rheinmetall Defence is using to build military vehicles it won the rights to in a 2018 tender process. Defence Force testing on vehicles by Hanwha and Rheinmetall, the two finalists for the phase three contract, will start this week.

Federal Liberal senator David Van, who represents Victoria, said the memorandum of understanding signed between Hanwha and the Andrews government on Tuesday was an overdue signal of intent on a contract that will be “nation building”, as Australia intends to spend $270 billion on new defence capabilities over the next 10 years.

“I’ve been strongly advocating to get the Victorian government to back this project because the Queensland government backed Rheinmetall for phase two,” Mr Van said.

Federal Liberal senator David Van said Hanwha could be a strong regional partner for Victoria and Australia.Credit:Alex Ellinghausen

“There is [$170 million] there that the Queensland bid has already spent … so to even up the playing field, we need the Victorian government to come to the party.”

Mr Van added that a deal with Hanwha, South Korea’s largest defence company, would build strategic relations in the Asia-Pacific region that the Queensland proposal could not match.

Victorian Trade Minister Martin Pakula, speaking after he signed the memorandum in Laverton North on Tuesday, said winning the contract would help reinvigorate manufacturing in Geelong after the loss of worksites such as the Ford factory in 2016.

Mr Pakula said up to 1000 “high value, high tech” jobs would be created in Geelong if Hanwha were to win the military contract.Credit:Wayne Taylor

“It would create up to 1000 jobs in Geelong, and not just any jobs. Good, high-value, high-tech, well-paid jobs. So we’ll be aggressively pursuing this opportunity,” he said.

The Trade Minister said that beyond the phase three Land 400 tender process, the memorandum of understanding would build long-term relations with Hanwha, which also operates in aerospace, fintech, clean energy and mining and signed a military deal with the United States in December.

While Mr Pakula compared the duel with Queensland to a State of Origin rugby league match on Tuesday, the then defence industry minister, Christopher Pyne, said in 2018 that Queensland and Rheinmetall’s success in the previous tender process was ultimately a “vehicle-versus-vehicle” decision.

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