Australia lends Austal A$245m to build a yard for the army's new heavy landing craft

Australia's National Reconstruction Fund Corporation will lend A$245 million to Austal Defence Australia to build a manufacturing facility at the Henderson defence precinct south of Perth, where the company is due to build eight Landing Craft Heavy vessels for the Australian Army by 2038, the government announced on 21 October.

The money is debt finance rather than a grant. Australian Defence Magazine reported that the state-owned fund will provide it as a loan to the Austal subsidiary, and that the investment still depends on finance documents being completed and on conditions that are usual for such a deal.

According to the joint ministerial release, Austal will use the funding to construct and fit out modular manufacturing facilities that meet defence requirements inside the Australian Marine Complex at Henderson. The release described the complex as a strategic national asset and one of the country's two main naval shipyards.

The government said the project is expected to create about 780 new local jobs in skilled trades, engineering and advanced manufacturing, on top of the roughly 1,200 people Austal already employs in Australia. It said the loan takes the fund's investments in defence or defence-related projects to more than A$570 million, after A$327 million committed earlier.

Ministers framed the loan as part of a push to build up the domestic industrial base behind Australia's maritime security, and linked it to a forecast that the global naval shipbuilding market will grow by about a quarter over the next seven years. The fund's chief executive made a similar case in comments carried by the defence magazine, arguing that the investment would add onshore naval assembly and quality assurance capacity that could later be used for other naval programmes and reduce reliance on foreign shipyards.

The landing craft are a key part of the army's planned shift towards operating from the sea in coastal areas. Australian Defence Magazine said each vessel will be able to carry more than 500 tonnes of troops, vehicles and equipment, including long-range precision strike weapons, and described the class as a major boost to the defence force's littoral capability that will also support disaster relief.

Austal says the Landing Craft Heavy is based on the Damen LST100 design, a ship of about 3,900 tonnes displacement that is 100 metres long and 16 metres wide. The company says each vessel is intended to carry six Abrams tanks, 11 Redback infantry fighting vehicles or 26 HIMARS launchers, and will be fitted with self-defence weapons and Australian military communications. It links the class to a strategy of denial built on deploying and sustaining land forces armed with long-range land and maritime strike weapons.

The contract for the eight heavy landing craft, to be delivered over 12 years, was signed on 20 February 2026, according to Austal. It followed a December 2025 contract for Austal to design and build 18 smaller Landing Craft Medium vessels, and a Strategic Shipbuilding Agreement signed with the Commonwealth on 28 August 2025 that made the company's Australian arm the government's strategic shipbuilder in Western Australia.

Austal's chief executive said the loan would pay for facilities that are critical to delivering the programme, according to the magazine, while the company presented the shipbuilding agreement as a way to give suppliers and workers in Western Australia a steady pipeline of naval work.