Australia's Foreign Investment Review Board has given the green light for South Korean shipbuilder Hanwha Corporation to raise its stake in Austal Limited from 9.9% to 19.9%. This is an important step in building international partnerships in the defense industry.
The approval comes with strict rules about Hanwha's access to sensitive information and board nominations, though Austal has not yet been informed about the specific conditions. The approval was granted by Federal Treasurer Jim Chalmers through HAA Pty Ltd, a company controlled by Hanwha.
Currently, Hanwha holds a 9.9% direct equity stake in Austal, along with an additional 9.9% economic interest through a cash-settled total return swap. The South Korean company initially bought its stake back in March 2025 and has shown interest in working with Austal on shipbuilding projects and obtaining a board position.
“Treasurer Chalmers has made his decision, and we respect it,” said Austal CEO Paddy Gregg. “Now, with this clarity, the Board and management are focused on delivering value for all Austal shareholders as Australia’s sovereign shipbuilder under the Strategic Shipbuilding Agreement, which is key to the U.S. defense industrial base, while also looking at growth opportunities in our U.S. and Australasia operations.”
Austal highlighted its strong financial performance, reporting record revenues of AUD $1.8 billion and an EBIT of $113 million for the fiscal year 2025. The company expects continued growth, projecting an EBIT of $135 million for fiscal 2026, which would set a new record. Austal's order book is over $13 billion and is likely to increase with the signing of Australia's Landing Craft Medium and Landing Craft Heavy programs.
This decision is particularly important due to Austal’s strategic role in both Australian and American defense capabilities. Through its U.S. subsidiary, Austal USA, the company is a major military shipbuilder and defense contractor in the U.S., with about 80% of its revenue coming from U.S. operations. Austal has facilities in Mobile, Alabama, San Diego, and Charlottesville, Virginia.
Austal's board plans to carefully consider any official requests for partnerships or board positions from Hanwha, determining if these arrangements would benefit all shareholders. Important factors will include feedback from design partners, efficient board operations for discussions on sensitive national security topics, governance and security issues, and the implications of adding a non-independent director.
This approval comes at a time of uncertainty regarding U.S. regulatory approval. Austal hasn't received any communication from the Committee on Foreign Investment in the United States about the maximum shareholding level approved for Hanwha—whether that is 19.9% or 100%. They see the likelihood of such clarification as low. Any future change of control transaction that exceeds 19.9% would need separate approvals from Australian authorities and the U.S. Defense Counterintelligence and Security Agency.
Hanwha has been gaining a strong foothold in the U.S. market, positioning itself as a key ally in the Trump Administration's initiatives to boost U.S. shipbuilding and regain maritime leadership against China. The company bought Philly Shipyard, a Jones Act shipbuilder, for $100 million in December 2024 and announced a $5 billion investment this year to increase production capacity at that yard from 2 to up to 20 vessels annually. Hanwha also made history as the first Korean shipyard to win a maintenance contract for a U.S. Navy vessel.
This recent development comes after an unsuccessful attempt by Hanwha to fully acquire Austal in 2024.
The potential partnership arrives at a crucial time, as the U.S. shipbuilding industry is experiencing considerable challenges, including delays and cost overruns affecting naval fleet construction and maintenance.