The first cut of steel being used to build the replacement replenishment ships has been undertaken following the completion of the critical design review, Navantia Australia has announced.

“We have reached the first major milestone in the delivery of this key enabling capability to Navy,” said Francisco Barón, managing director of Navantia Australia.

“Navantia understands the importance of meeting targets at the initial design and build stages to deliver a capability on time and on budget, and that is why…cutting steel [on Monday] on schedule is so important.”

Australian industry will play a key role in the build of the two ships, Navantia said in a statement, with a minimum of $120 million being invested into Australian products, skills and expertise. As part of this, 4,500 tonnes of steel has been sourced from BlueScope Steel.

Australian steel will be used in the second replenishment ship, but not the first. Indeed, the typical production cycle has been changed to accommodate the use of Australian steel.

“Normally in a ship production of two you would cut both ships almost in parallel and stock the steel to the side; it saves the set-up of tooling,” Peter Croser, Director General Specialist Ships Acquisition at the Capability Acquisition and Sustainment Group (CASG), told the Senate Foreign Affairs, Defence and Trade Legislation Committee on May 29.

“In this case, they are going to cut the first steel for the first ship starting in mid-June. That production will continue through to about the fourth quarter of this year. Subsequently, they will cut [steel for] the second ship.”

Croser said that BlueScope intends to supply the steel by the end of this year to be transported to Spain, ahead of cutting in the first quarter of next year.

In addition to steel from BlueScope, the Integrated Platform Management System will be built in Australia by Navantia SAGE Automation Group (NSAG); Taylor Bros will supply a range of services including hospital, laundry and galley fit-outs; Saab Australia will supply the combat management systems; and Raytheon Australia will supply the communications systems.

The Commonwealth entered into contracts with Navantia in May 2016 for the acquisition and initial five-year sustainment of the new ships.