Australia and Germany Ready for $1 Billion Arms Deal

Australian Army sappers from the 2nd Combat Engineer Regiment guide an Boxer Combat Reconnaissance Vehicle through the decontamination bay during a chemical, biological, radiological and nuclear defence training serial at Gallipoli Barracks, Brisbane, May 11, 2023. (CPL Nicole Dorrett, Australian Defence Forces).

Australia and Germany could sign a $1 billion defence deal soon to deliver 100 Boxer armoured vehicles to the European nation.

The German parliament has passed an agreement overnight that will see arms manufacturer Rheinmetall build the vehicles at its facility in Queensland, according to reports.

Defence Industry Minister Pat Conroy described this as a “great result for Australia” and a “testament to our defence industry.”

“It will create more than 600 direct jobs alone in Queensland and many more than that in the supply chain,” he told reporters in quotes cited by The Sydney Morning Herald.

Prime Minister Anthony Albanese unveiled the $1 billion deal during a visit to Germany in July 2023.

At the time, he said it would boost Australia’s sovereignty and defence capability, along with the economy.

“This is a great outcome. And it’s the first outcome of quite a few that we have ready to announce tomorrow with our friends here in Germany,” Mr. Albanese said.

“And I thank [German] Chancellor Scholz for the very kind invitation to come here to commemorate these agreements that we will enter into tomorrow.”

One of Australia’s Largest Export Deals

Mr. Albanese described the deal as one of Australia’s “largest ever exports” to guarantee 1,000 jobs in Queensland.

During the prime minister’s visit to Berlin in July, an in-principal agreement was signed by Ambassador to Germany Philip Green and Federal Ministry of Defence State Secretary Benedikt Zimmer.

Deputy Prime Minister Richard Marles observed at the time the defence relationship between Australia and Germany was “growing significantly.”

“We are excited about this in-principle agreement for Rheinmetall to build Boxers for the German Army in Brisbane,” Mr. Marles said.

“This is a significant investment for our local defence industry; securing local jobs and contributing to Australia’s economic growth.”

He said he looked forward to seeing the deal between the countries progress.

Mr. Conroy also said that he was excited that Boxers made in Brisbane using Australian equipment would be used by the German army at the time.

“This export opportunity highlights the world-leading skills and capabilities within Australia’s defence industry. This deal will support hundreds of well-paid, high-skill jobs and grow the defence relationship between Australia and Germany.”

However, the future of this deal was put in doubt when Australia awarded an Infantry Fighting Vehicles (IFV) contract to a South Korean company instead of Rheinmetall, the ABC reported. 

Korean conglomerate Hanwha won a bid to supply the Australian army with 129 Redback  Infantry Fighting Vehicles over Rheinmetall, who was supposed to assemble its Lynx IFV in Queensland.

The publication confirmed politicians in Germany voted to keep the Australian export deal, despite the loss of the Infantry Fighting Vehicles contract.

Reports in September emerged that Germany suspended the negotiation

The new weapon carriers will be manufactured at the Military Vehicle Centre of Excellence (MILVEHCOE) in Ipswich, Queensland.

Rheinmetall’s MILVEHCOE headquarters spans 11 hectares and includes manufacturing, electronics and admin buildings.

Also at the site, is a three-storey electromagnetic compatibility chamber and a 100-metre weapons test firing tunnel.