France's DCNS wins contract to build Australian submarine fleet

Reuters with CNBC
People visit on October 28, 2014 the DCNS stand at the Euronaval naval defense equipment fair in le Bourget, south of Paris.
Stephane De Sakutin | AFP | Getty Images

France's state-controlled naval contractor DCNS Group has won a A$50 billion ($40 billion) contract to build Australia's new fleet of submarines, beating out bids from Germany and Japan.

Australian Prime Minister Malcolm Turnbull said on Tuesday that DCNS had been chosen to build 12 new submarines at shipyards in Adelaide, South Australia.

The purchase is the centerpiece of the Liberal government's defense strategy, unveiled in February, which called for an increase in military spending of nearly A$30 billion over the next 10 years to protect strategic and trade interests in the Asia-Pacific.

DCNS's bid proposed a diesel-electric version of its 5,000-tonne Barracuda nuclear-powered submarine.

Japan's Mitsubishi Heavy Industries and Kawasaki Heavy Industries and Germany's ThyssenKrupp had also been in the running for the contract, one of the most lucrative global defense deals on offer.

America's Raytheon, which built the system for Australia's aging Collins-class subs, is vying for a separate combat system contract, in contest with Lockheed Martin, which supplies combat systems to the U.S. navy's submarine fleet.

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