Treasurer Jim Chalmers promises call ‘by Christmas’ on Hanwha bid to take 19.9 per cent of shipbuilder Austal

Federal Treasurer Jim Chalmers has promised a decision by Christmas on South Korean conglomerate Hanwha’s bid to double its stake in naval shipbuilder Austal, blaming the delay on the “complexity” of the call. Dr Chalmers had suggested the potentially contentious ruling would be made in September, but he said in Canberra on Monday that “it’s completely on me that it’s taken a bit longer because I wanted to satisfy myself that all of the work has been done”. Having made an unsuccessful takeover tilt at Austal last year, Hanwha took a 9.9 per cent stake in the WA group in March and has applied to the Federal Investment Review Board to increase the holding to 19.9 per cent. While FIRB makes a recommendation on such applications, the final decision rests with the Treasurer. There are sensitivities on either side of the decision, with the Federal Government mindful of not offending regional defence allies in South Korea and Japan, while supporting development of a sovereign shipbuilding industry as it prepares to award billions of dollars in new naval defence contracts. Dr Chalmers said on Monday he would make the closely watched decision “in the next week or so, but certainly before Christmas”. “This is a very complex case,” he said. “It has warranted us taking a little bit longer than usual to come to, or try and come to and conclude these discussions and these decisions. “It actually has a lot more complexity than people might appreciate, and I like to make sure that when I make these decisions, I’m doing it in a consultative way, in a collaborative way, and so that’s why it’s taken longer than September to arrive at that decision.” The Hanwha decision is also being watched by Japan, given the Government’s recent choice of Mitsubishi Heavy Industries to supply the Japanese company’s upgraded Mogami frigate to the Royal Australian Navy. The first warships will be built overseas and construction then shifted to Henderson in WA, where Austal would help build the remainder. With defence contractors wary about the risk of rivals gaining access to their technology, Japan’s Defence Ministry has at least twice written to the Department of Defence in Canberra to express its unease about Hanwha buying more of Austal. The $2.7 billion Austal has pushed back against Hanwha also, questioning what the conglomerate could offer the Australian company and expressing its understanding about Mitsubishi’s “nervousness” over an increased stake for Hanwha. However, it has also assured Mitsubishi that Austal would be able to protect the company’s technologies while working on the new frigates. Under a strategic shipbuilding agreement with the Government, Austal — 19.3 per cent owned by Andrew and Nicola Forrest — is poised to share in $20b of contracts for the frigates and landing craft over the next 20 years. However, the Commonwealth deal comes with a so-called ‘poison pill’ to ensure the Government can protect and maintain control of a sovereign shipbuilding industry in Australia. The extraordinary terms of the agreement would enable it to take control of Austal’s Henderson shipyard in the event of a takeover of Austal.