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A decision over the future of the historic Lithgow Small Arms Factory in New South Wales is shaping into a defining precedent between heritage protection and Australia’s defence industry needs.
The historic small arms manufacturing site is under consideration by a Independent Planning Commission review to list it on the NSW State Heritage Register in its entirety or in part.
The factory, which opened in 1912, played a central role in industrial weapons production for the Australian Defence forces during World War I and World War II.
Government heritage advisers from the NSW Department of Climate Change, Energy, the Environment and Water and Heritage NSW have argued in favour of a broad listing, instead of a potential partial listing which reportedly risks undermining the integrity of buildings and historical layout of the site crucial to its national importance.
On the opposite side of the decision, both the Lithgow City Council and site landowner, defence company Thales Australia, have raised concerns about the impact of a broad heritage listing on the region’s economic future and Australia’s domestic defence manufacturing capability.
Thales, a subsidiary of Thales Group, reported that a blanket heritage listing could stifle flexibility, ongoing upgrades and the ability to reconfigure infrastructure in an emergency defence scenario.
Andrew Downes, representing Thales Australia which operates the facility as an active manufacturing site, raised the company’s concerns during a landowner meeting on March 9.
“There’s a range of very significant 30 environmental issues at the site, which stretch back over the many years of direct Commonwealth ownership/ownership under ADI, and then the obligations that were incurred on acquisition of ADI by Thales. So, there is a range of matters that deal with the environmental issues at that site which we do have a series of plans for,” he said.
“We also carry preparedness requirements for the site to not just meet the current operational demands of Defence, but what those demands might be in the event that Defence’s policy settings have changed.
“The purpose of the Lithgow site is to provide a sovereign small arms capability to the Commonwealth… given we operate that site under a premise of industrial latency, we have operations there that meet the day-to-day, but we also have an obligation to ensure that we can scale for the future.
“We took the view that the effect of listing would be that it would freeze the site in time, which would then preclude its long-term sustainability and suitability for the defence needs of Australia.
“It also would create significant cost in terms of maintaining the sovereign small arms capability understood in a site that is capable of meeting preparedness obligations. So, we have been very clear in public that listing would jeopardise the long-term suitability of the site, which then of course raises a question as to where does sovereign small arms manufacturing occur in the future?
“If the site is indeed precluded from that, then there is then a significant cost of re-establishing that capability elsewhere. And what we have seen across the western world in the last sort of 10 years is countries are regrettably having to re-industrialise their defence capability, that these capabilities are fragile, they are expensive, they require very long lead times, and that’s just not in terms of the physical hardware, but the folk that work in these factories as well.
“Often, once a capability disappears or is forced to transition, it can be very hard to be re-created. So, I’d say there’d be financial cost to the business, but I’d argue there would also be much larger social costs as well.”
In addition, Lithgow City Council argued that a blanket heritage listing could impact the site’s importance to local employment in defence-related industry and the region's economic transition away from coal-mining. Both argued for a partial listing approach targeted at specific historically significant buildings, rather than a broad-brush listing.
Capability Acquisition and Sustainment Group, Deputy Secretary Chris Deeble, speaking in the public submissions for the heritage listing, said that the Department of Defence was also concerned about the listing.
“The Department of Defence has a number of significant concerns should the proposed listing proceed, as it may impact the ability to supply weapons to the Australian Defence Force, impose constraints that inhibit or delay the activities contractually obligated under contract with Thales,” he said.
“(In addition, the listing could) detrimentally impact existing planning and operational requirements that align with our national security interests, including any future work to be conducted at the site by Defence or Thales; and affect the Commonwealth's rights for the protection of technology, and the ability to remediate any environmental concerns.
“Consequently, the Department of Defence does not support the proposed heritage listing of the Lithgow Small Arms Factory.
“Since my last correspondence, on 20 October 2025, the Australian Government announced we would provide 3,500 rifles to the Papua New Guinea Defence Force, along with other initiatives in support of our mutual defence agreement under the Pukpuk Treaty. These rifles will be produced in the Lithgow Small Arms Factory with economic benefit to the local community.
“Defence has also commenced negotiations with Thales to industrialise machine gun manufacture at the Lithgow Small Arms Factory to improve supply chain resilience and assure this capability for the Australian Defence Force. This significant investment in Australian industry supports our Sovereign Defence Industrial Priorities.
“No other manufacturer or facility in Australia has the capability to produce military weapons of the grade and scale required by Defence. For this reason, Defence maintains a Deed with Thales that reserves certain rights to take control of sovereign weapons manufacturing should it be determined that it is in the national interest. Any limitation or constraint on Defence's ability to exercise its rights due to any increase in compliance or other requirements, as a consequence of any heritage listing, would come with significant risk to delivering essential capability to the Australian Defence Force.
“You may be aware that there are several areas of the site which may indicate signs of environmental contamination from over 100 years of continual use. Thales is currently conducting an environmental site survey to better understand the nature of any contamination, and any actions required for remediation and compliance with contemporary standards for Commonwealth consideration. Any heritage listing that limits the ability of Defence and Thales to safely maintain, operate and change the factory or progress environmental compliance would be of significant concern.”
The Independent Planning Commission is now tasked with balancing a decision to preserve a site of national historical importance while ensuring it remains viable within Australia’s defence industry growth.
Importantly, the case may set a future precedent for a broader national challenge, regarding how to protect legacy industrial sites without constraining the few modern manufacturing capabilities still present in Australia.
The final decision may challenge Australia's perspective about how heritage and industry coexist in an increasingly tense geo-political setting.
