Australia and South Korea sign billion-dollar defence contract

Australia has finalised its biggest ever defence deal with an Asian nation today with the signing of a billion-dollar contract.

Prime Minister Scott Morrison says Australia will work with “like-minded” countries to ensure there are economic choices in the Indo-Pacific amid rising tensions with China, as a $1bn military contract was inked on Monday.

The largest defence deal with an Asian nation was finalised on the second day of South Korean President Moon Jae-in’s visit to Australia – the first time a world leader has been in the country since the pandemic.

Mr Morrison and Mr Moon witnessed the formal signing of the $1bn contract with South Korean defence giant Hanwha to build 30 Self-Propelled Howitzers and 15 Armoured Ammunition Resupply Vehicles.

Prime Minister Scott Morrison and Moon Jae-in, President of the Republic of Korea on Sunday. Picture: NCA NewsWire / Martin Ollman

The government first committed to the project during the 2019 federal election when it announced an Armoured Vehicle Centre for Excellence would be built in Geelong.

The deal is expected to create up to 300 jobs.

Further agreements were also signed relating clean energy technology and critical minerals with each nation committing $50m.

Mr Moon was asked about whether his visit would send a “negative signal” to China and how South Korea should respond to Beijing’s economic coercion.

“Australia does not desire a dispute arising in the region and for peace, we will continue to co-operate with Australia,” he said.

“And the state visit I make at this time has nothing to do with our position over China.”

He said their relationship with China was important, particularly in regard to the denuclearisation of North Korea.

“Therefore, Korea is focused on the steadfast alliance with the US and also with China, we want a harmonised relationship,” he said.

“And we want to maintain such a relationship and we will be putting in the efforts to make this happen.”

The billion dollar deal was finalised on Monday. Picture: NCA NewsWire / Martin Ollman

Mr Morrison said Australia would continue to work with “like-minded” countries.

“Australia and Korea are like-minded liberal democracies and we work together to ensure there are economic choices in the region,” he said.

He said South Korea also had a very important role to play in resolving tensions over Taiwan.

“We both share a very strong partnership and alliance with the United States and that provides an opportunity for dialogue, equally Korea also has a very strong and open dialogue with China,” he said.

“The scenario (of war) is one that no-one seeks, that no-one hopes transpires, whether by miscalculation or other means, and, therefore, I think Australia and Korea have important work to do as liberal democracies.”

In a statement, Defence Minister Peter Dutton said the Hanwha contract would increase Australia’s artillery capability.

“The prime ability of the new vehicles is to fire and move quickly, avoiding enemy counter-attack,” he said.

Prime Minister Scott Morrison and Jenny Morrison greet Moon Jae-in, President of the Republic of Korea, and first lady Kim Jung-Sook at Parliament House. Picture: NCA NewsWire / Martin Ollman

Work on the new facility in Geelong is expected to commence in 2022.

Mr Moon’s visit coincides with the 60th anniversary of Australia-Korea relations and ties have now been elevated to the status of a Comprehensive Strategic Partnership.

Originally published as Australia and South Korea sign billion-dollar defence contract