A teaming arrangement with Rheinmetall will see Australian flat steel manufacturer BlueScope deliver thousands of tonnes of feedstock for the local production of high performance armour steel for a new national military vehicle industry, if Rheinmetall secures the $5 billion LAND 400 Phase 2 project.
Defence Connect understands the teaming agreement will be signed today before BlueScope employees at the company’s Port Kembla steelworks near Wollongong as part of a company briefing about Rheinmetall’s bid for LAND 400 Phase 2 and the BOXER 8x8 Combat Reconnaissance Vehicle, which Rheinmetall has committed to building in Queensland if it wins the contract.
BlueScope’s Port Kembla steelworks is already working alongside Rheinmetall and Illawarra steel processing company Bisalloy Steel to be in a position to potentially deliver multiple grades of armoured steel for processing and supply to local and export military vehicle programs, including LAND 400 Phase 2.
Testing carried out by Bisalloy, BlueScope and Rheinmetall is part of a certification and qualification process to meet the performance standards of armoured steel required by Rheinmetall. Bisalloy and BlueScope are aiming to be the first companies in the southern hemisphere to be qualified to deliver this steel. Currently, only two steel companies globally have qualified to deliver this steel, each in the northern hemisphere.
Rheinmetall Defence Australia managing director Gary Stewart said the company was proud to deliver military vehicles that protected Australian soldiers with high-performance steel designed, developed and manufactured by two great Australian companies.
"Australian steel underpins our plans to establish a new national military vehicle industry delivering to the Australian Defence Force and export customers," Stewart said.
"BlueScope Steel is the nation’s premier steel producer and Bisalloy Armour steel is a leading product for defence applications in Australia and export markets."
Bisalloy Armour steel is already in use in Australian defence applications and is specified for hulls in Armoured Personnel Carriers (APC), Light Armoured Vehicles (LAV), Collins Class submarines and the Bushmaster Infantry Mobility Vehicles in Australia, along with many APCs and LAVs worldwide.
Rheinmetall has said it will transfer technology, research and development opportunities to Australia and work with Australian SMEs to deliver this capability to the ADF. The company has already announced a dozen companies within its LAND 400 team from NSW, Queensland, South Australia, Tasmania, Victoria and Western Australia, including Melbourne-based Cablex, Burnie-based Direct Edge, Brisbane-based G&O Kert, Melbourne/Brisbane-based Hilton Manufacturing, Perth-based Hoffman Engineering, Melbourne-based Nezkot Precision Tooling and Engineering, Adelaide-based Plasteel and Adelaide-based Redarc. The local SMEs are also included in the Rheinmetall global supply chain, enabling each to export their technologies globally.
Rheinmetall has committed to establishing a Military Vehicle Centre of Excellence (MILVEHCOE) in Queensland if it wins the LAND 400 Phase 2 contract. The MILVEHCOE will be the global manufacturing base for the BOXER CRV, the company’s new LYNX Infantry Fighting Vehicle and range of LANCE turrets under its LAND 400 offering to Australia.
Currently the largest supplier of military vehicles to the ADF, Rheinmetall is delivering more than 2,500 logistics trucks to the Army under the LAND 121 Phase 3B program.
Rheinmetall recently placed an order with Bisalloy for the procurement for approximately 15 tonnes of armoured steel. This material will be shipped to Germany for mechanical, blast and ballistic testing as part of the next step in the qualification process of Australian armoured steel for use in the next generation of Australian military vehicles and in global Rheinmetall programs through the company’s the global supply chain.
BAE Systems Australia, which is also competing for the LAND 400 Phase 2 project, has offered several steel options in its bid, including domestic production by Bisalloy for armoured steel.
Use of Australian steel in major defence projects has come under fire recently, with the government revealing there is no mandate for Australian steel in the LAND 400 Phase 2 or SEA 5000 projects.
Major General David Coghlan, Head Land Systems, told the Senate estimates hearing in December the tender has taken an "encourage, rather than free to engage" approach, saying "there are no essential requirements in LAND 400 for anything" and that the aim of that is to "give industry the best possible option to provide AIC to the LAND 400 project".
While the government and Defence Industry Minister Christopher Pyne have maintained Australian steel will be used to build the Future Frigates and the LAND 400 vehicles, Australian Steel Institute CEO Tony Dixon told Defence Connect instituting a mandate for Australian steel in all taxpayer funded projects would provide social and economic benefits to Australia.
"The Australian Steel Institute strongly supports the mandating of Australian steel in all taxpayer funded defence and infrastructure projects," Dixon said.
"Mandating Australian steel extends the social and economic benefits to Australian businesses, communities and individuals. This position was articulated by the Prime Minister when these projects were announced and should be a key criteria in determining the preferred contractor."
Senator Rex Patrick, a former submariner in the Royal Australian Navy, has also questioned why the tenders for the multibillion-dollar projects have failed to include requirements for Australian steel.
"The Prime Minister, Defence Industry Minister and Defence officials have all verbally expressed a need to use Australian steel in major projects like the SEA 1000, SEA 5000 and LAND 400. That verbal expression does not seem to have been translated into a written requirement in the tenders – which creates ambiguity for tender respondents," Senator Patrick said.
"I acknowledge that the government is pursuing the inclusion of Australian steel in the submarine contract. They have contracted Naval Group to develop a ‘Steel Development and Qualification Plan’. I will be keeping a close watch on Defence as SEA 5000 and LAND 400 progress to make sure similar plans are also contracted."
Both SEA 5000 and LAND 400 Phase 2 projects are set to be decided before the halfway point of this year. Defence will buy 225 CRVs costing $4-5 billion from either Rheinmetall or BAE Systems Australia for LAND 400 Phase 2. Testing of both contenders' vehicles recently wrapped up, with a decision on the project expected this year.