In October the 61st AJBCC/JABCC Joint Business Conference was held in Nagoya and was attended by 550 delegates, another remarkable result and the clearest indicator of the intensity of interest in the bilateral relationship. The delegates focussed on both the emerging opportunities as well as important challenges that can be overcome as partners. Discussions and presentations ranged from energy security during transition to zero carbon, critical minerals, data centres, photonic data transmission, flying cars, revolutionary building construction and cooperation between Australia, Japan and Southeast Asia. There was also an important contribution from the Future Leaders suggesting solutions to the international supply chain challenges.

It was excellent to have the conference in Nagoya, the fast-beating heart of Japan’s manufacturing and technology sectors. Significant recent events in Australia and Japan have converged to provide an additional sector in which complementarity could emerge, overlapping strategic alignment, defence, manufacturing and energy.

One of the key potential projects is the supply of 11 frigates to the Australian Navy. Mitsubishi Heavy Industries and German company Thyssenkrupp Marine Systems have been shortlisted to provide the frigates. Companies from South Korea and Spain also applied but did not make the final round. MHI has submitted a plan for an updated Mogami class frigate and the program is estimated to be worth A$10 billion. It is expected that the first three frigates will be built overseas and the rest in Australia.

The likely location in Australia is in Henderson WA, which is the location of the Australian Marine Complex, a shipbuilding complex that hosts ASC, Austal, BAE Systems and Civmec. These companies all have experience in building and maintaining maritime vehicles for the Australian Navy. The presence of these companies provides an established set of capabilities and skills that could be complementary to those of the overseas shipbuilders and provide a quantum leap for both supplier and customer. The Australian Government will make a decision in 2025 and the Japanese Government made an official announcement to allow the joint development and production of the upgraded Mogami frigates should Australia give the contract to MHI.

Such a significant project will also be complementary to the Australian Government’s policy called Future Made in Australia which is meant to subsidise the development of high tech manufacturing capability in the green energy supply chain (including green hydrogen and batteries) and critical minerals. There would be significant cross fertilisation of the major value chains of energy, resources, manufacturing and defence for the long term benefit of both countries. Obviously in this column we wish MHI good luck.

Finally there is the appearance of a serious policy debate in Australia about the potential for nuclear power generation, which is a very positive development. Although it is a vision for the longer term, if Australia chooses to adopt nuclear through the use of modular reactors, Hitachi GE Nuclear Energy is one of the leaders in this field. Altogether the potential for further expansion of the Australia-Japan relationship is an exciting prospect.

Author: Manuel Panagiotopoulos

Managing Director, Australian and Japanese Economic Intelligence