South Korea awarded major defence contract for fleet of infantry fighting vehicles

After five years, a decision has finally been made on who will build Australia’s new state-of-the-art armoured fighting vehicles.

A South Korean defence contractor has been awarded a multibillion-dollar contract to replace the nation’s Vietnam-era infantry fighting vehicles.

Defence Industry Minister Pat Conroy confirmed on Thursday that Hanwha had won the contract to supply the Australian Army with 129 of the tanklike vehicles over German rival Rheinmetall.

The contract, worth between $5bn and $7bn, has been the subject of a five-year tender process that began under previous prime minister Scott Morrison.

Chief of Army, Lieutenant-General Simon Stuart, said after two years of “extensive testing” the Redbank design was found to be the “best option” for the defence force.

Mr Conroy described the project as one of the largest projects in the army’s history, and the vehicles would replace the Vietnam War-era armoured personnel carriers still in use by the army.

A Hanwha Redback IFV (left) and a Rheinmetall Lynx IFV (right). Picture: ADF

Under the program, Hanwha plans to build the fleet of 129 Redback vehicles at an existing factory in Defence Minister Richard Marles’ Victorian electorate of Corio.

Unsuccessful bidder Rheinmetall had proposed building its Lynx at its facility in Ipswich in Queensland.

Mr Conroy stressed “capability” and “value for money” tipped the contract in Hanwha’s favour, not the location of the build.

“The Deputy Prime Minister recused himself from the process completely,” the minister told reporters in Canberra.

“He was not part of any stage of the decision making for this … he did that voluntarily based on a perception of a conflict of interest.

“This is the right vehicle for Australia.”

Earlier this year, the government slashed the number of IFVs planned for the program from 450 to just 129 after a recommendation from the Defence Strategic Review.

Defence Industry Minister Pat Conroy said the contract was awarded based on ‘capability’ and ‘value for money’. Picture: NCA NewsWire / Martin Ollman

The project was originally intended to cost up to $27bn.

Opposition defence spokesman Andrew Hastie slammed Labor for sticking by the DSR recommendation and demanded the government release the costings.

“The government must be transparent about where this cut of up to $20bn will be reallocated,” he said.

The first of the vehicles will be delivered by early 2027, with all 129 to be completed by late the following year.

Mr Conroy said the project would support up to 600 direct and more than 1000 indirect jobs in the Geelong region.

The news is expected to come as a blow to Rheinmetall just two weeks after Prime Minister Anthony Albanese announced Australia would supply more than 100 of the contractors’ Boxer heavy weapon carriers to Germany from 2025.

Mr Conroy said the government considered it a “separate matter” to the IFV decision when asked if Thursday’s announcement put the billion-dollar deal in doubt.

“We will continue to engage with the government of Germany on that. We are very hopeful that will continue,” he said.