Press Conference, Washington, United States of America

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The Hon Pat Conroy MP

Minister for Defence Industry

Minister for International Development and the Pacific

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media@defence.gov.au

(02) 6277 7840

General enquiries

minister.conroy@dfat.gov.au

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12 April 2024

SUBJECTS: Announcement of contract between HII and Bisalloy Steel, AUKUS progress.

MINISTER FOR DEFENCE INDUSTRY PAT CONROY: Well, look, I’m Pat Conroy, the Australian Minister for Defence Industry and Minister for International Development and the Pacific, and I’m joined by Eric Chewning from HII, the largest shipbuilder in the United States of America. And we’re here with a really exciting announcement, which is that HII have entered contract with a great Australian company Bisalloy Steel where a quantity of Australian steel, proudly Australian steel, will be acquired by HII for testing and training. And the purpose of this is to demonstrate that the steel is of sufficient quantity to form part of constructing the Virginia class submarines, not just the ones that Australia is acquiring but the dozens that are being built for the United States Navy. 

And people talk about AUKUS a lot and AUKUS Pillar I, and I often say that the first work that Australian companies will win on constructing nuclear-powered submarines won’t be ours; it will be for the United States Navy and the Royal Navy. And it’s a great example of our countries working together to tackle the supply challenges that are out there. We need to expand all three industrial bases if we’re to meet the strategic challenges that we’ve been presented with. And this is a concrete example of an Australian company supporting the industrial efforts of the United States which, if all goes to plan, means more jobs for Australians, a future made in Australia, but a future made in Australia helping the national security of not just Australia but the United States. 

And I want to applaud HII for being so forward-leading. They’ve been out to Australia. They’ve got an Australian office now. They’ve engaged with hundreds of Australian companies working out who can add value, who can support their efforts to ramp up production to support the United States Navy. So this is a great day for Australian industry and it’s a great day for the alliance between Australia and the United States. 

And I invite Eric to say something. 

ERIC CHEWNING: Well, Minister Conroy, thank you for inviting me and HII to be part of this announcement. I’m honoured to be invited by the minister to make a few remarks about HII’s first purchase order from an Australian supplier in support of the AUKUS trilateral partnership.

As you know, HII is America’s largest military shipbuilder. Our Newport News shipbuilding division is the nation’s only designer, builder, refueler and defueler of nuclear-powered aircraft carriers. And we’re one of two US shipyards capable of designing and building nuclear-powered submarines. This contract is the first integration of an Australian company into the Newport News shipbuilding supply chain. 

HII’s purchase of steel from the Australian manufacture Bisalloy Steel will be used for training and testing so we can begin the qualification process for the incremental steel blowing required for AUKUS. This is a critical first step towards an integrated US-UK-Australian supply chain. 

It is also the start of creating new business opportunities for suppliers on three continents. HII is using a crawl-walk-run approach to the onboarding. By placing an order for material with Bisalloy Steel, we can onboard the company in Newport News’ supply base and begin the necessary steps to begin the lengthier qualification process for the material to be used shipboard. The contract will advantage the entire nuclear shipbuilding enterprise in support of AUKUS. It will ultimately strengthen the supply base in all three countries. 

This partnership will add more suppliers to support the incremental volume to construct more submarines in the United States. Today HII has met with more than 300 Australian companies to start the engagement process of becoming an HII supplier. We look forward to continuing this engagement and into the future signing more contracts with Australian companies. 

Let me finish by saying that this purchase order is a huge win by kickstarting the growth and supply base for key commodities with our Australian allies as we work together towards a mission of maintaining ships and defending our collective freedoms. 

So, Mr Minister, let me present you with a copy of your purchase order.

MINISTER CONROY: Thank you very much. 

ERIC CHEWNING: Yes. 

MINISTER CONROY: Thank you very much. Thank you. So I just invite questions on today’s specific announcement with Eric, and then obviously, as is our practice, if there’s anything else people want to ask about, we’ll ask Eric to leave the picture so he doesn’t get caught in nasty Australian politics. 

JOURNALIST: I guess the obvious question maybe to Eric first is just why this company? You’ve just had a President knock back Nipon Steel’s takeover of steel into America. It’s sort of like, well, are there not enough American companies to do this work? Is there not enough capacity to do steel manufacturing in America? Or is this some sort of, you know, goodwill gesture towards HII coming to Australia to be part of the AUKUS submarine – 

ERIC CHEWNING: Sure. So the entire tenet of AUKUS is how do we integrate and expand industrial supply chains to support the Pillar 1 activities. As I said, we’ve engaged with over 300 companies in Australia, and this company was first along in the process and so was the first one we were able to begin the qualification with. 

JOURNALIST: This is obviously, as you were saying, initially for testing through the initial purchase order. But can you give us a sense of what the scale of this might be? I imagine obviously a submarine needs a lot of steel. Like, how big a contributor could this company be? 

ERIC CHEWNING: I would describe this as an important first step. 

MINISTER CONROY: And if I can just add to both those questions: we announced a $16 million contract late last year for Bisalloy to start producing steel for testing certification for SSN-AUKUS build in Australia. So we’ve got great confidence. We build some great quality steel, and one of the points that’s out there you know, in the ether is that 70 per cent of the components that are on the critical supply chain path for the Virginia class submarines, so 70 per cent of the components that determine the timing and delivery of Virginia class submarines are sole source. So it’s in the interests of the US industrial base to expand that, to have second sources where it makes sense. And, as Eric said, the whole ethos of AUKUS is to grow our industrial basis together. 

The three industrial bases, the sum of all three parts are greater than their individual components. By expanding them we can tackle supply chain blockages in all three countries and work together, which is the strength of the alliance and what we’re really so happy about today. 

JOURNALIST: Are you investigating any other Australian suppliers to start contributing to AUKUS submarines? 

ERIC CHEWNING: Sure, we are in the process of talking to over 300. 

MINISTER CONROY: And if I can give you a further update on that: we’ve started a qualification program government to government, and we’ve got 26 Australian companies going through the first tranche of that. HII is a part of that process, and they’ve identified many more beyond our initial 26. 

And there are some great companies out there that can really make an effort. We’ve identified four areas of the supply chain where Australia’s got great capability and can be upskilled to support the process immediately. And it’s a little known fact that we’re already supplying parts to the UK Astute class submarines out of Sydney in Rydalmere. So it’s a great example where we’ve got expertise; we just need to expand it and work together collectively. 

JOURNALIST: Can we just get, though, a little bit of detail, just to Tom’s question about how much in this first tranche? Just, like, some sort of descriptor of what’s being produced? 

ERIC CHEWNING: Sure. It’s our typical practice not to disclose purchase orders. 

JOURNALIST: And to what extent was the Australian government involved in this match-making for this particular deal? 

MINISTER CONROY: Well, as I said, we’ve got our process of identifying companies. That happened very quickly last year as we announced the optimal pathway was that the Department of Defence started a process of mapping Australian industry, talking to the US Navy about where they had supply chain constraints. And, as I said, we’ve identified four areas where there’s a supply chain constraint in the United States and a capability within Australia. 

And so we’ve been part of this process, but it’s really important to acknowledge that HII organically have established an Australian presence and have been incredibly forward-leaning in working with Australian industry. So I just am evangelical about their engagement in Australia, and it’s a pointer of even bigger things to come. 

ERIC CHEWNING: Thank you, Minister. And I’d also say, too, our supply chain is over 4,000 companies. And so a core competency we have is qualifying and identifying new suppliers as we expand. 

JOURNALIST: When will this qualification be signed off? Because I know if there is a change in government, steel might become a little more political than it is. 

ERIC CHEWNING: So the qualification process varies by company. Typically it’s a one to two-year process. 

MINISTER CONROY: Any other questions on this announcement? No? Excellent. 

JOURNALIST: Can I just get you to present the copy of the contract again? 

ERIC CHEWNING: Sure. 

MINISTER CONROY: Any other questions that people want to fire at me? 

ERIC CHEWNING: I’m going to leave, though. 

JOURNALIST: Minister, just there obviously was some confusion about what President Biden announced yesterday with [indistinct] architecture. Was he announcing new, or can you just break that down in simple language? 

MINISTER CONROY: Well, this was in the communique from Prime Minister Kishida’s visit to the United States, so he was reflecting on what was in the communique. And it’s an articulation of work that has been already announced in other forums. So, for example, in the 2+2 Defence and Foreign Ministers meeting between Australia and Japan we had talked about this work and there was a trilateral Defence Ministers meeting late last year that also talked about this work. 

So this is about all three countries working towards common architecture for integrated air and missile defence. What does that mean in plain language? That means that working on common systems for the brains of any air defence system. We’ve got a project called Air 6500, which is the integrated air and missile defence. We’ve contracted with Lockheed Martin to deliver that and it will be sent to the RAAF Base Williamtown in the Hunter region. And obviously there are similar projects afoot in Japan and the United States. 

So it’s working to form a network of that to obviously support greater integrated air and missile defence in the western Indo-Pacific. So it’s good work, it’s important work. And we’re getting on with delivering it right now. 

JOURNALIST: [Indistinct] no new missile [indistinct]? 

MINISTER CONROY: People are getting very excited about Patriot missiles and other things. We’re not at that stage. I think the most important thing in this is to have the brains of the systems, which is the integrated air and missile defence system, the command and control systems, being able to talk to each other. That’s the first step. What missiles are used to then hit targets is the second step. But having the brains of the systems working together is the most important and first step. 

JOURNALIST: And is it – it’s not a trilateral missile defence system, is it? That’s going too far? 

MINISTER CONROY: Well, what I would say is it’s about having either a common architecture, which means same systems in all three countries, or having systems that can work together. And this is the things we’re trying in other areas. So we have operations quite regularly where you might have one partner using their platform to detect a target. You might then have another partner that uses their system to communicate that targeting data, and then the effect, destroying the target, is by the third partner. So it’s about working together in that manner, does that make sense? 

JOURNALIST: Yeah. A few weeks ago former President Trump said he wouldn’t be able to work with Kevin Rudd if he comes back into office. You deal with defence industry. Are you confident that Kevin Rudd would be able to advocate on behalf of Australia effectively if Donald Trump comes back? 

MINISTER CONROY: Well, I heard those comments, and I think you probably misrepresented them slightly in terms of what was said. But leaving that aside, we’ve got great confidence in Kevin Rudd. He’s doing a wonderful job. I was with him just before meeting with the President of the World Bank, for example. And Kevin’s held in incredibly high esteem across both sides of politics in this country. If you want an example of it, his forthright advocacy was critical in getting the passage of the submarine transfer legislation and the technology exemption laws through the National Defense Authorization Act through both houses of the US Congress in December last year. I was here then and witnessed the vote in the Senate gallery, and there was an 80 per cent vote in the Senate and a 75 per cent in the House for that legislation. Massively contributing to that was Kevin Rudd and the respect and esteem he is held in on both sides. So we’ve got great confidence. 

JOURNALIST: You’ve had a couple of meetings up on the Hill with Republicans. What is your sense about how they think a potential change in administration would affect AUKUS? 

MINISTER CONROY: Well – 

JOURNALIST: And the sale of submarines to Australia? 

MINISTER CONROY: It won’t surprise you to hear that I don’t comment on confidential discussions I have with representatives of other governments. But what I can say to you is for any – it’s a statement of fact that the US system at the moment is pretty finely balanced between both sides of politics. So to get an 80 per cent vote on any piece of legislation is a tremendous achievement and is a sign of the bipartisan commitment in the United States for AUKUS. 

And, quite frankly, the AUKUS arrangement is a multi-decade deal. It is a multi‑decade technology-sharing pact. It will outlast governments of all persuasions in all three countries. We’ve already had one change of government across the three countries – being Australia – and AUKUS not only survived and has prospered under that, over the next 10, 20, 30 years – as much as I would love to be in government in 30 years – there are going to be changes of government, and the AUKUS pact will survive those because it’s in the national interest of all three countries. 

This is not about charity for Australia from the United States or the United Kingdom. The AUKUS deal is in the interests of all three countries, growing the industrial base of all three countries, strengthening deterrence in the Indo-Pacific. It will survive and prosper because it is in all our national interests. 

JOURNALIST: If or if and when Trump becomes the confirmed nominee, do conversations start with him at that point and his team regarding AUKUS? Does that work get done ahead of the election? 

MINISTER CONROY: Look, I’m not going to comment on how we engage with the domestic political process in the United States. You can understand why that would be inappropriate. But can I just say that we’ve got great confidence about the prosperity of AUKUS, and we’re just working on that basis. 

JOURNALIST: Just on the timing of the election, there’s been discussion this week that that has impacted the push, particularly from the US, to add new partners to Pillar II of the AUKUS pact obviously with the announcement considering Japan. From an Australian government perspective, is that relevant to kind of bedding down that expansion potentially before the chance of a change in government later in the year? 

MINISTER CONROY: No. I haven’t seen any of the debates in that frame. From the minute we announced AUKUS, but particularly Pillar II, we were very open about we would look at working with other countries on a project-by-project basis where it made sense and the sort of factors – their commitment to provide resources, their technical know-how and their security systems to protect data – Japan is the logical first country to explore partnering with. The timing of that is a trilateral approach; it’s not down to any individual country. 

JOURNALIST: And just on that, as you say, it’s kind of a project-by-project basis. What sort of expertise specifically is Japan bringing to the table? Have we looked at it and gone, “We think they’ve got something really impressive on hypersonic missiles or in a particular area that we’ve dominated to this point?” 

MINISTER CONROY: Well, that’s going on right now between the three parties – or the three partners. They’ve got one of the most advanced economies in the world. Their defence industrial base is incredibly advanced. They’ve got many areas where they can cooperate. We already have really strong bilateral defence partnerships with them across all three countries. So those conversations are going on right now. 

JOURNALIST: And just in terms of the – sorry, one more – just in terms of the time line around AUKUS, of course we know the time line around the subs roughly – you know, 2032, 2035. With Pillar II are there any key dates that we should know of when things are meant to happen? 

MINISTER CONROY: Well, it’s meant to happen as fast as possible, and I think we’ll get early advances there. So to give you – it’s quite hard to talk about AUKUS Pillar II because it’s a bit more diffuse than we get a submarine here or we maintain a US submarine there. So to give you a flavour of things that are happening right now, we’ve released our first mission to the three defence industrial bases. We’ve invited the best and the brightest from the three countries to make suggestions on how they can develop electronic warfare technology. That’s the first area. The plan is that we would pick the best proposals from the three countries and work them up. 

Another example that’s happening right now is out of the defence trilateral ministers meeting late last year two projects that are happening right now is, one, sharing data and AI data on submarine signatures that will go into the P8 Poseidon submarine‑hunting aircraft that all three countries run. That is happening right now. So we’re combining that data right now. 

And the other one is developing common or comparable systems to launch maritime underwater autonomous vehicles – or vessels, rather, from our torpedo launch tubes across the three submarine fleets. That work is occurring right now. The whole point of AUKUS Pillar II is to get advanced technology into the war fighters’ arms as soon as possible. 

I think we might leave it there everyone. Thank you.

ENDS

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