Japan Submits Bid for Huge Australian Submarine Contract

Japan on Monday submitted its bid for Australia’s multi-billion dollar submarine contract, a deal that France and Germany are also desperate to win.

Australia has solicited bids for a project worth up to 50 billion Australian dollars ($36 billion) to replace its current diesel-electric Collins-class submarines, with a Monday deadline to submit final proposals.

A Defense Ministry official in Tokyo said Japan’s proposal includes plans to build the submarines in Australia, which is keen to secure more jobs in connection with the project.

The Abe administration substantially relaxed regulations on arms exports in April 2014. Winning the Australian sub deal would provide major impetus to Japan’s plans to export defense equipment to countries such as India and the Philippines.

Australia plans to spend some AU$20 billion to build as many as 12 submarines to replace its aging fleet.

The government-led Japanese team with Mitsubishi Heavy Industries Ltd. and Kawasaki Heavy Industries Ltd. has proposed the world’s first lithium ion battery-powered submarines against Germany’s plan to enlarge its export model and France’s nuclear subs.

Rival bidders DCNS SA of France and ThyssenKrupp Marine Systems GmbH of Germany have also offered to build the submarines in Australia and generate jobs.

The Defense Ministry official said Japan is “confident” its proposal will win, without disclosing further details, including proposed expenses and the construction period.

During a visit to Australia in November, Defense Minister Gen Nakatani said picking Japan could help ensure maritime security in the Asia-Pacific, alluding to the importance of regional allies such as the U.S., Japan and Australia working together in the face of China’s growing military might.

For Australia, cooperating with Japan on a defense project risks angering China, its biggest trading partner.

The tender process has been politically sensitive, with Canberra keen to maximize Australian industry involvement and jobs. There are fears that an off-the-shelf purchase would kill off the domestic shipbuilding industry.