South Korea and Japan are leading the race to build Australia's next frigate fleet. 

The Albanese government is expected to soon announce its preferred design for SEA 3000, a multi-billion-dollar project that aims to upgrade Australia’s naval capabilities by replacing the Anzac-class warships with up to 11 new general-purpose frigates.

The SEA 3000 contract, valued at over $11 billion, calls for the first three frigates to be built overseas and delivered by 2029 before production shifts to the Henderson shipyard in Western Australia. 

Five firms from four countries are vying for this deal: South Korea’s Hanwha Ocean and Hyundai Heavy Industries (HHI), Japan’s Mitsubishi Heavy Industries (MHI), Spain’s Navantia, and Germany’s ThyssenKrupp Marine Systems (TKMS).

Industry analysts suggest Japan and South Korea are favoured, partly due to their strategic importance in the Indo-Pacific. German and Spanish shipbuilders are also contenders, with 

Germany’s MEKO A-200 offers modularity to meet specific Australian requirements with “minimal change”. Spain’s ALFA 3000 design, now in service with the Saudi military, is considered another adaptable option.

In November, Rear Admiral Wendy Malcolm and Defence Secretary Sheryl Lutz is set to visit the four competing nations to announce Australia’s initial decisions. 

Japan and South Korea, Australia’s key allies in the Indo-Pacific, bring specific advantages to the table. 

Japan’s influence in AUKUS as an official observer and South Korea’s recent $5 billion deal with Australia to produce infantry vehicles underscore their importance to Australia’s defence strategy. 

Japan's government has reportedly proposed buying Naval Strike Missiles from a local factory near Defence Industry Minister Pat Conroy’s electorate if selected, though this remains speculative. 

Additionally, UK defence giant BAE Systems is backing MHI’s bid, building on its existing collaborations with Japan in the Global Combat Air Programme.

Both countries face challenges. 

Japan, with limited military export experience, has nonetheless received praise from Australian Navy Vice Admiral Mark Hammond for its advanced shipbuilding. 

South Korea’s Hanwha Ocean and HHI, meanwhile, are entangled in a legal dispute over alleged technology theft related to destroyer designs, complicating their bids. 

Despite these issues, South Korea is strengthening Western ties, as demonstrated by Hanwha Ocean’s recent maintenance work on the US Navy’s USNS Wally Schirra - the first such collaboration for a Korean firm. 

Analysts say Australia's decision could be based on a need to reinforce Indo-Pacific security cooperation.

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