Defence Minister Linda Reynolds and Defence Industry Minister Melissa Price have announced a $1.1 billion agreement with Thales Australia for the continued management and operation of Australia’s munition factories in Benalla (Victoria) and Mulwala (NSW).
The $1.1 billion agreement provides surety of supply of key munitions and components for the Australian Defence Force, and demonstrates the Morrison government’s ongoing commitment to maintaining a domestic munitions manufacturing capability.
This contract demonstrates that Australia’s sovereign defence industry is vital to delivering a capability advantage to the ADF. The continued long-term partnership between Thales and Defence reinforces the government’s commitment to maintaining a world leading, competitive and safe domestic munitions manufacturing capability in Australia.
Thales continues to build long-term relationships with hundreds of Australian suppliers, building Australia’s self-reliance and the capability of the broader Australian manufacturing sector.
Defence Minister Linda Reynolds said, "It’s vital that we continue to enhance the readiness of the ADF and ensure we have the necessary sovereign depth for sustaining key capability and materiel such as the surety of supply of munitions. This agreement with Thales Australia will continue to maintain a safe and compliant operation, and increase our domestic capacity to manufacture key munitions in support of ADF operations."
Thales’s recent supply chain study with AlphaBeta Advisers proved that there is a strong correlation between sovereign industry capability and benefits flowing to Australian suppliers.
"Mulwala and its sister facility in Benalla are the home of munitions manufacturing in Australia, generating vital job opportunities in regional New South Wales and Victoria," Minister Reynolds explained.
In 2019, Thales spent $113 million with its Australian suppliers for munitions and small arms, supporting 414 direct jobs in the supply chain.
Minister Reynolds added, "This contract will establish NIOA as a tenant alongside Thales Australia, where together they will provide opportunities for domestic manufacturing while enhancing supplies of key munitions for Defence."
Defence Industry Minister Melissa Price added, "We’ve developed and implemented a plan to grow munitions and small arms capability in Australia, as one of our Sovereign Industrial Capability Priorities. It’s about identifying critical capabilities for the ADF, strengthening our defence industry, and creating new opportunities."
This contract will enable Thales to secure more than $450 million in export and non-ADF orders over the coming 10 years, demonstrating Australia’s world leading munitions manufacturing capability.
"Thales Australia has an excellent track record of working with local small businesses and I have no doubt they’ll continue to utilise the skills and ingenuity of small businesses right around Australia," Minister Price added.
Chris Jenkins, chief executive of Thales Australia, added, "We have worked closely with Defence to manufacture munitions for more than 20 years, using our deep technical expertise to provide urgently required munitions to the Australian Defence Force whilst on operations."
The group has invested more than $20 million in research and development and $25 million in capital infrastructure over the last 10 years at the Benalla and Mulwala facilities and will invest further to develop new and world leading products for the Australian Defence Force.
"Everything is about trust. Especially when it comes to Defence. This historic contract with the Australian government builds on our trusted partnership with Defence for the long term supply of essential equipment," added Christophe Salomon, executive vice president, Thales Land and Air System.
Thales employs approximately 650 highly skilled staff between its two Australian government owned facilities in Benalla and Mulwala. It exports products to 17 countries globally.
The new agreement underpins the renewed strategy of multi-tenancy at the Benalla and Mulwala factories and ensures access and support to other companies, particularly small to medium enterprises for munitions manufacturing.
It will also support key federal government initiatives including export opportunities as part of the Defence Sovereign Industry Capability Priorities.