Australia announced on Thursday that the UK's BAE Systems will build the country's fleet of nuclear-powered submarines.

It is a key step in fulfilling the landmark AUKUS security pact between Canberra, London, and Washington, which was first announced in September 2021. 

More details are expected when Australian and British defense and foreign ministers meet jointly in Adelaide on Friday.

What does the agreement entail?

The AUKUS agreement will see Australia buy up to five nuclear submarines from the US in the early 2030s before jointly building and operating a new class, SSN-AUKUS, with Britain, around a decade later.

The pact will see Australia become the seventh nation to operate nuclear-powered submarines.

"What AUKUS is doing is allowing Australian industry to further invest here, but there are opportunities also opening up with our UK and US partners," Australian Defense Minister Richard Marles said in a statement on Thursday.

An overhaul of Australia's military

The deal is a central effort to overhaul Australia's military, with all three AUKUS members aiming to check China's military expansion in the Asia-Pacific.

The submarines will be stealthier than the country's existing fleet and capable of deploying over vast distances without surfacing, posing a potent threat to any foe.

Although the subs will not carry nuclear weapons, the technology underpinning their nuclear-propelled engines has been a tightly held secret between the United States and Britain for more than 60 years.

Delays and costs remain a concern

Although the exact number of submarines that will be built with Britain and the specific financial details of the deal have not been released, Australian defense officials said the country would get at least five of the SNN-AUKUS class subs at a cost of billions of dollars.

With shipyards in Britain and the United States suffering from delays and cost overruns, Australia has agreed to pay £2.4 billion (€2.8 billion, $3.1 billion) to the UK towards design work on the conventionally armed SSN-AUKUS and expand a Rolls Royce plant that builds nuclear reactors for submarines.

Australia will invest $3 billion (€2.76 billion) in US shipyards, which build the Virginia-class nuclear submarines Canberra will be sold early in the next decade amid concerns that a backlog of orders could jeopardize the deal.

Additionally, Australia will spend AU$1.5 billion (€910 million, $993 million) to prepare a naval base in Western Australia for nuclear submarines. The total cost of the work is expected to be about AU$8 billion.

French contract break forces hefty compensation

The Australian government's announcement in 2021 to cancel an AU$90 billion contract for French-made diesel-electric submarines set off an international spat. 

Since then, Australia had struck the AUKUS deal with the United States and Britain to provide submarines powered with US nuclear technology — a deal French leaders said was sealed behind their backs.

In a move to heal relations with Paris, Canberra later agreed to pay French maker Naval Group a €555 million settlement for breaking the contract.

km/sms (AFP, Reuters)