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Raytheon’s Advanced Medium-Range Air-to-Air Missile. Raytheon is among the companies seen as likely bidders for the work.

Prime Minister Scott Morrison will announce the plan on Wednesday with a warning the “changing global environment” highlights the need to create the sovereign capacity.

The Australian Strategic Policy Institute estimates the country may have to spend $100 billion on missiles and other guided weapons over the next two decades to respond to rising powers such as China.

The new plan sets up a contest between private companies to bid for the contract to build the facility,with state governments also likely to lobby to gain the investment and jobs.

Companies such as Raytheon,Lockheed Martin,Kongsberg and BAE Systems are seen as likely bidders for the work,which would allow Australia to replace missiles currently shipped from overseas.

Australia last made its own missiles in the 1960s when local researchers created the Ikara anti-submarine missile and launcher,which was built in Melbourne.

The need for a stronger local capacity was made clear after the government released a Force Structure Plan last July that emphasised the greater use of guided weapons,in part due to the increased tensions in regional sea lanes.

“As the COVID-19 pandemic has shown,having the ability for self-reliance be it vaccine development or the defence of Australia,is vital to meeting our own requirements in a changing global environment,” Mr Morrison said in a statement ahead of the announcement.

“It’s an imperative we now proceed with the creation of a sovereign guided weapons capability as a priority,accelerating this process following the idea first being explored in the Force Structure Plan.”

The facility is expected to manufacture air-to-air missile,ground-launched missiles as well as guided weapons used to defend ships.

The arrival of hypersonic missiles is a longer-term scenario,with the Australian Defence Science and Technology (DST) Group and others conducting research in the field.

ASPI analyst Marcus Hellyer last year said the emphasis on missile capacity was one of the major findings of the FSP review of the Australian Defence Force structure.

“Perhaps the most remarkable feature of the FSP is that the ADF has entered the ‘age of missiles’ with a vengeance,” he wrote.

“There’s potentially $100 billion in investment over the next two decades in missiles and guided weapons.

“That includes the offensive systems needed to deter and defeat an adversary from a greater distance,such as hypersonic weapons. Even the Army is acquiring long-range missiles.

“But it also includes greatly enhanced defensive systems,such as ballistic missile defence,which is something Defence has considered for a long time but never previously committed to.

“That’s a clear sign that the region is getting much more dangerous.”

Australia’s alliance with the United States is fundamental to the plan because the company making the missiles will need cooperation from the US.

“We will work closely with the United States on this important initiative to ensure that we understand how our enterprise can best support both Australia’s needs and the growing needs of our most important military partner,” Defence Minister Peter Dutton said in a statement.

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