Defence Industry Minister Pat Conroy said Australia would establish a homegrown industry to produce long-range guided missiles and other much-needed munitions.

"Why do we need more missiles? Strategic competition between the United States and China is a primary feature of Australia's security environment," he said in a speech.

"That competition is at its sharpest in our region, the Indo-Pacific."

Australia will partner with US-based weapons giant Lockheed Martin to make "guided multiple launch rocket systems (GMLRS)", Conroy said, one of the first such facilities outside the United States.

The US$200 million "advanced weapons manufacturing complex" would eventually produce up to 4,000 missiles each year.

"This equates to more than a quarter of current global GMLRS production and more than 10 times current Australian Defence Force demand," Conroy said.

Australia had also contracted French weapons maker Thales to domestically manufacture M795 artillery rounds, which are commonly used in howitzer batteries.

"We all wish that acquiring new weapons and munitions was not necessary," Conroy said.

"But in a world marked by crisis and disorder, a well-equipped military is an essential part of national defence.

"In this environment, Australia needs credible military capability to support a strategy of deterrence by denial."

The announcement follows China's recent test-firing of an intercontinental ballistic missile in the Pacific, the first such test in four decades.

Concerns about China's massive defence spending and Russia's invasion of Ukraine have led many US allies to voice concern about a shortfall in munitions manufacturing capabilities.

Australia is among several Asia-Pacific nations dramatically increasing defence spending.

In April, Australia unveiled a defence strategy that envisaged a sharp rise in spending to counter its vulnerability to foes interrupting trade or preventing access to vital air and sea routes.

Besides rapidly developing its surface fleet, Australia plans to deploy stealthy nuclear-powered submarines in a tripartite agreement with the United States and Britain known as AUKUS.

sft/cwl

LOCKHEED MARTIN

THALES