France to build Australia a new fleet of submarines

Australia announced on Tuesday that it was awarding the $39-billion (34 billion-euro) contract to DCNS, a mostly state-owned French company based in Paris.

"The French offer represented the capabilities best able to meet Australia's unique needs," Prime Minister Malcolm Turnbull told reporters in the South Australian state capital of Osbourne.

The decision came as a surprise to some observers, who thought a Japanese consortium would almost certainly clinch the deal after enjoying an early lead in the bidding process.

But ultimately, it was Japan's inexperience with military-industrial projects overseas and an initial reluctance to build the new warships in Australia - a prerequisite for Canberra ahead of a July 2 general election - that scuttled its chances.

"I am proud to be here to announce Australia's future fleet of … 12 regionally superior submarines will be built here in Osbourne," Turnbull said. "The submarine project … will see Australian workers building Australian submarines with Australian steel."

Added bonus

The DCNS submarine is the Shortfin Barracuda (pictured), a model that the company claims will remain state-of-the-art until the 2060s. It is a diesel-electric version of a 5,000-ton submarine that is currently nuclear-powered.

Germany's ThyssenKrupp Marine Systems had offered to revamp its 2,000-ton Type 214 class submarine, but Canberra reportedly thought that was too technically challenging to make the option feasible. Japan would have built Australia a variant of its 4,000-ton Soryu submarine.

Australia is significantly increasing its defense spending as it seeks to protect its interests in the Asia-Pacific region amid the rising power of China. But awarding the bid to a French company had the advantage of not alienating Beijing, which would have bristled at a Japanese victory. China is Australia's top trading partner.

cjc,blc/hg (Reuters, AP, dpa)