Austal signs Heads of Agreement with Commonwealth for strategic shipbuilding

Austal Limited (ASX: $ASB) has signed a Heads of Agreement with the Commonwealth of Australia to establish a Strategic Shipbuilding Agreement. The agreement, if finalized, would designate Austal as the Commonwealth's strategic shipbuilder at Henderson, Western Australia. As part of the pilot program under the agreement, Austal is proposed to construct and deliver the Birdon-designed Landing Craft (Medium) capability to the Australian Army under the Commonwealth's LAND8710 project. Additionally, the Commonwealth has ordered two additional Evolved Cape Class Patrol Boats at an acquisition cost of $157 million.

Austal CEO Paddy Gregg on the Strategic Shipbuilding Agreement

The SSA Heads of Agreement with the Commonwealth is an important first step in developing a head contract framework under which future contracts can be formed for further work in Western Australia. The Cape Class extension would provide important job security for Austal's ship builders as the last vessel of the current program moves through completion and delivery of the final 2 vessels. The Landing Craft project would introduce a new-build program for Austal at Henderson.

Summary of Austal's Strategic Shipbuilding Agreement and Projects

Austal has signed a Heads of Agreement with the Commonwealth of Australia to establish a Strategic Shipbuilding Agreement, which, if finalized, would see Austal selected as the Commonwealth's strategic shipbuilder at Henderson, Western Australia. The agreement includes the construction and delivery of the Birdon-designed Landing Craft (Medium) capability for the Australian Army under the Commonwealth's LAND8710 project, as well as the order for two additional Evolved Cape Class Patrol Boats. The company aims to conclude the formal Strategic Shipbuilding Agreement by the last quarter of CY2024. This agreement is a significant step towards establishing Henderson as a strategic shipbuilding hub and enhancing Australia's naval industrial base. The projects under the agreement are expected to provide job security for Austal's ship builders and contribute to the capability of Australia's surface fleet.