$3 billion deal with the UK gets Australia closer to having a fleet of nuclear-powered submarines

BritainÅfs Secretary of State for Defence Grant Shapps, center, speaks to media as Premier of South Australia Peter Malinauskas, third left, Australian Minister for Foreign Affairs Penny Wong, left, Deputy Prime Minister of Australia Richard Marles, right, BritainÅfs Foreign Secretary David Cameron and United StatesÅf Ambassador to Australia Caroline Kennedy, second right, listen during a visit to the Osborne Naval Shipyard in Adelaide, Australia, Friday, March 22, 2024. Australia is set to provide 4.6 billion Australian dollars ($3 billion) to British industry to support the construction of nuclear-powered submarines and ensure its new fleet arrives on time. (Matt Turner/AAP Image via AP)

A ship is under construction at the Osborne South Naval Shipyard in Adelaide, Australia, August 24, 2017. Australia announced Friday, March 22, 2024, it is set to provide 4.6 billion Australian dollars ($3 billion) to British industry to support the construction of nuclear-powered submarines and ensure its new fleet arrives on time. (David Mariuz/AAP Image via AP)

BritainÅfs Secretary of State for Defence Grant Shapps, center right, and BritainÅfs Foreign Secretary David Cameron, left, walk with the Premier of South Australia Peter Malinauskas, right, Deputy Prime Minister of Australia Richard Marles, second right, Australian Minister for Foreign Affairs Penny Wong, second left, and United StatesÅf Ambassador to Australia Caroline Kennedy, during a visit to the Osborne Naval Shipyard in Adelaide, Australia, Friday, March 22, 2024. Australia is set to provide 4.6 billion Australian dollars ($3 billion) to British industry to support the construction of nuclear-powered submarines and ensure its new fleet arrives on time. (Matt Turner/AAP Image via AP)

SYDNEY (AP) — Australia is set to provide 4.6 billion Australian dollars ($3 billion) to British industry to support the construction of nuclear-powered submarines and ensure its new fleet arrives on time, the two countries said Friday.

The announcement came a day after the two countries signed a defense and security pact to better meet challenges such as China's increased activity in the South China Sea and South Pacific.

United Kingdom Defense Minister Grant Shapps said the submarine program was expensive but necessary.

“Nuclear-powered submarines are not cheap, but we live in a much more dangerous world where we are seeing a much more assertive region with China, a much more dangerous world all around with what’s happening in the Middle East and Europe,” Shapps told the Australian Broadcasting Corporation.

“Countries need to invest in making sure that adversaries see we are serious about our security, defending freedom of navigation, for example.”

The 10-year deal announced at an annual ministers' gathering will boost capacity at the Rolls-Royce factory in Derby, U.K., to build the nuclear reactors that will propel the submarines to be built by BAE Systems in Adelaide, Australia.

The Virginia-class submarines will be primarily from a U.K. design and will have a U.S. weapons system onboard.

Australia Defense Minister Richard Marles said the agreement showed that the nuclear submarines program would be fulfilled and would create new production capability for the AUKUS partners, referring to the grouping of Australia, the U.K. and the United States.

“These are big foundational decisions which demonstrate that the pathway to Australia acquiring a nuclear-powered submarine capability under the banner of AUKUS is happening, and the result of that right here is going to be the most advanced manufacturing in the nation and one of the most advanced manufacturing production lines in the world,” Marles told reporters Friday at the Osborne shipyard in Adelaide.

Australia is acquiring at least three U.S. nuclear submarines from the early 2030s under the AUKUS agreement.

"Australia, the United Kingdom, and the United States remain fully committed to this shared endeavour," a joint trilateral statement from Marles, Shapps and U.S. Defense Secretary Lloyd Austin said Friday.

“These steps to grow Australia’s submarine construction and maintenance capability are critical to the AUKUS partnership, expanding trilateral industrial capacity and building the collective resilience of AUKUS partners to produce and sustain conventionally armed nuclear-powered submarines for decades to come.”