Austal Secures $100 Million Australian Government Loan to Expand U.S. Naval Shipbuilding Capacity

Austal Limited (ASX: ASB) has executed a loan agreement for US$100 million in funding from Export Finance Australia (EFA), Australia’s export credit agency, to support the expansion of its shipbuilding operations in Mobile, Alabama. The facility will specifically enhance Austal’s construction capabilities for U.S. Navy and Coast Guard vessels.

The EFA loan was previously credit approved and included in Austal’s A$488 million refinance package announced in June 2025, but was pending final documentation. With paperwork now complete and subject to conditions precedent, the funds will directly support construction of the company’s Final Assembly 2 (FA2) project.

“Securing Australian Government funding for our U.S. infrastructure expansion is a major milestone for Austal, enabling the Company to execute on its $13.1 billion order book. It also facilitates the shared defence objectives between the Australian and US Governments and validates the relationship that exists between both Governments and Austal, building on the recent Strategic Shipbuilding Agreement signed by Austal and the Australian Government.”

The 10-year loan term reflects Austal’s long-term secured order book for vessels that will be constructed at the facility. These include up to eleven U.S. Coast Guard Offshore Patrol Cutters and up to seven U.S. Navy Ocean Surveillance vessels (T-AGOS).

In addition to the FA2 project, Austal is simultaneously undertaking another major expansion in the United States with its submarine Module Manufacturing Facility 3 (MMF3) project. According to company statements, these expansion efforts are part of a comprehensive capital growth strategy supported by “a combination of debt, equity and cashflow.”

“The Albanese Government is backing Australian defence companies to grow and export their world-class capabilities by securing lucrative international contracts,” said Australian Minister for Trade and Tourism, Senator Don Farrell. “Austal’s expansion shows the strength of Australian businesses to export, invest and support shared Australian-US priorities such as defence.”

This financing development comes amid significant progress in Austal’s U.S. Coast Guard Offshore Patrol Cutter program. Last month, the Coast Guard exercised contract options worth US$314 million with Austal USA for long lead time materials for three additional OPCs and logistic supply items for two vessels.

Work on Austal USA’s first OPC, Pickering (WMSMS 919), is advancing with keel laying scheduled for December, while construction on the second vessel, Icarus (WMSMS 920), began in early August.

The original OPC contract, awarded to Austal USA in June 2022, covers detail design and construction of up to 11 vessels with a potential value of $3.3 billion. Thus far, Austal has been awarded two vessels, along with long lead time materials for a third.

The 110-meter cutters will operate beyond 12 nautical miles from shore with a range of 10,200 nautical miles at 14 knots and a 60-day endurance period. They will conduct various missions including law enforcement, drug and migrant interdiction, and search and rescue operations.

This development follows a major restructuring in the OPC program. In July 2025, the Department of Homeland Security partially terminated a contract with Eastern Shipbuilding Group (ESG) for OPCs 3 and 4, citing delays and cost concerns. ESG’s delivery of the first OPC was originally scheduled for June 2023 but has been delayed until at least late 2026.

The Coast Guard plans to acquire a total of 25 OPCs as part of its fleet modernization strategy. According to a 2023 U.S. Government Accountability report, the acquisition cost estimate for the program has increased significantly due to various factors, including contract restructuring following disruptions caused by Hurricane Michael and higher infrastructure costs.

In February 2024, Austal USA began implementation of plans to construct a new manufacturing facility, expanding its shipyard capacity in Mobile, Alabama. The project, which commenced in summer 2024, enhances the existing waterfront facility with a new assembly building, waterfront improvements, and a shiplift system.

The new assembly building consists of three bays, providing approximately 192,000 square feet of covered manufacturing space and increasing capacity to manufacture modules for submarine and other surface ship programs.

The Pearlson-designed shiplift system features an articulated lifting platform approximately 450 feet long by 125 feet wide, capable of lifting and launching vessels over 18,000 long tons. This capacity will facilitate the launch and docking of various vessels, including U.S. Navy Constellation-class Frigates, TAGOS-25 class Ocean Surveillance Ships, Independence-variant Littoral Combat Ships, and the U.S. Coast Guard Heritage-class Offshore Patrol Cutters.

Upon completion, Austal USA’s Mobile facility will span 180 acres and include over 1.5 million square feet of indoor manufacturing space.

Founded 35 years ago, Austal has contracted more than 350 vessels for over 122 commercial and defense operators in 59 countries. The company has grown to become the world’s largest aluminum shipbuilder and Australia’s largest defense exporter. In addition to its Mobile facility, Austal operates industry-leading shipyards in Australia, Philippines, and Vietnam, with service centers worldwide.

Subscribe for Daily Maritime Insights

Sign up for gCaptain’s newsletter and never miss an update

— trusted by our 107,207 members