WA shipbuilder Austal takes over design work for $2b Army vessel project amid growing concerns over delays

West Australian based shipbuilder Austal will take over the design work for a $2 billion project to build army landing craft at the Henderson shipyard, amid concerns the program is already falling behind schedule. Inside defence concerns have been growing for months over complications with the “landing craft medium” program, which was originally expected to begin delivering the first of 18 vessels from next year. Two years ago a design from New South Wales based shipbuilder Birdon was selected for the LCM project and the company then signed a Memorandum of Understanding to jointly develop the vessels with Austal. In August, the Commonwealth signed a Strategic Shipbuilding Agreement with Austal, establishing a new subsidiary to deliver key defence maritime platforms starting with Army landing craft, and is eventually expected to construct general purpose frigates. On Monday Austal announced to the Australian Stock Exchange that it had taken over the design phase of the landing craft medium program, also known as Project LAND 8710 Phase 1, from its partner Birdon. “The Landing Craft Medium (LCM) Design Authority Tasking Statement (DATS), with a value of approximately $15 million, appoints Austal Defence Australia to undertake initial design and engineering activities as the Design Authority,” the WA-based company announced. “The DATS provides Austal Defence Australia with the ability to control, mature and progress the LCM design, and continue working with industry partners to finalise the LCM vessel design which commenced in 2024 under interim arrangements.” According to the ASX statement authorised by Austal Chief Executive Officer Paddy Gregg, the company also expects to construct the landing craft which will eventually replace the army’s aging Mark 8 mechanised fleet. “Subject to finalisation of detailed contractual terms, Austal Defence Australia anticipates that a further LCM Design & Build Tasking Statement to continue to mature the design and then construct and deliver the LCM will be awarded in Q4 of CY2025,” he said. Sources familiar with the LCM project warn the delivery date is now facing delays of up to two years, which is likely to affect subsequent plans to build a fleet of larger army landing vessels, as well as other shipbuilding projects at Henderson. Last week South Korean defence giant Hanwha has declared confidence that its aggressive bid to double its stake in Austal will soon be approved by the Australian Government. Hanwha is currently the second-largest shareholder in Austal with a 9.9 per cent holding but is seeking to increase its stake to 19.9 per cent — the takeover threshold — which requires approval from Australia’s Foreign Investment Review Board. At Austal’s annual general meeting last week, the group’s chair, former US Navy Secretary Richard Spencer, questioned whether Hanwha was genuine in its claims about a partnership that would benefit the $3 billion company’s shareholders.