- Deal approved under strict data and security controls.
- Government cites national interest and defence safeguards.
- Board access and information sharing are tightly restricted.
On Friday, Australia announced that it wouldn’t stand in the way of South Korea’s Hanwha nearly doubling its stake in shipbuilder Austal from 9.9% to 19.9%, but only under strict conditions related to data access and security, reports Reuters.
Government Approval With Safeguards
Treasurer Jim Chalmers said the decision would strengthen protections around Austal while safeguarding Australia’s strategic and sovereign interests. “It follows a thorough and robust process that took account of all the relevant economic, national security and other national interest issues,” Chalmers said in a statement.
“It incorporates advice from relevant agencies, including the Department of Defence, the Department of Home Affairs, the Department of Foreign Affairs and Trade and our national security agencies.” Financial details of the transaction were not disclosed.
Conditions on Information and Board Access
If Hanwha goes ahead with this investment, there will be limitations on how it can access and store sensitive information, along with stringent rules about nominating representatives to Austal’s board, according to Chalmers. Hanwha has shown interest in collaborating with Austal on shipbuilding projects and is looking to secure a board position if its proposal gets the green light.
Austal responded by saying: “The board will closely review the opportunities and risks associated with those partnership and board position requests, should they be made officially.”
Strategic Context and Defence Links
This decision comes on the heels of a technology and supply chain agreement that was signed last month between Austal and the state-owned ASC, which is working together to build Australia’s nuclear-powered submarine fleet as part of the AUKUS defence pact with the US and the UK. Back in June, Hanwha also received the go-ahead from the US Committee on Foreign Investment (CFIUS) to increase its stake to 19.9%. It’s worth noting that Austal provides defence vessels to the US Navy.
Minority Stake Maintained
Chalmers confirmed that Hanwha will remain a minority shareholder and won’t be allowed to raise its stake beyond 19.9%. Following the government’s announcement, trading in Austal shares was paused on Friday morning.
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Source: Reuters
