In Canberra, it’s called taking out the trash. Late on Friday, 27 June, the Department of Defence quietly issued a media release with news it must have hoped would get little media attention: it had cancelled a planned contract for making shell bodies for 155 mm artillery in Australia.

But this could yet be turned into a positive story. The project was ill-conceived, anyway, and Defence now plans to relaunch and widen it.

If Defence thinks this through properly, the replacement project should aim at giving encouragement to companies that put their money into Australian military industrial capacity. It should also help address a new problem in munitions supply that affects its friends, one for naval shells. And it should send a useful signal of Australian seriousness to Washington.

Two years ago, urgent supplies to Ukraine were draining Western stocks of 155 mm shells, standard ammunition for bombarding enemy ground positions. That was when Defence called for tenders to establish an Australian forging capability to make bodies for such shells. In October 2024 it chose Thales Australia to do the job at its Benalla factory.

Annual production was to be 15,000 shell bodies a year, with an annual capacity of 100,000. This is what’s just been cancelled.

But Defence now says that since 2023 ‘there have been notable changes in the global defence industrial base. This has included a surge in international demand for naval 5-inch [127 mm] and significant increase in global capacity to produce 155 mm projectiles.’

‘This has required Defence to re-assess its manufacturing approach on 155 mm projectiles. In addition, Defence will work with industry to accelerate production of naval 5-inch for the Australian Defence Force, and explore export opportunities to support international partners.’

It still wants a forging capability for 155 mm shells and supply of 15,000 rounds a year, but it no longer commits to the annual capacity of 100,000.

The original project was faulty because Defence didn’t intend to establish Australian production of complete shells. Fuzes, propellant, primers and explosive fillings were all to be imported, so the project would have hardly added to Australian defence self-reliance.

Moreover, it was to be a duplicative effort. Germany’s Rheinmetall and the Australian company Nioa had already agreed in 2019 to build a factory for forging 155 mm shell bodies at Maryborough, Queensland, for export. The technologically advanced plant, built with the help of a $28.5 million grant from the federal government, has been delivering shell bodies since 2023.

The next step is obvious. Defence should order shell bodies from Rheinmetall Nioa Munitions at Maryborough. The company already has plans to use its full capacity—which, by coincidence, is the same level of 100,000 shells a year that Defence wanted—but it has said that it could significantly increase output with some additional investment.

And Defence should establish facilities for making the other parts of 155 mm shells in Australia to create true self-reliance. The Maryborough factory is using imported steel. If Defence can’t arrange a local supply, it should at least import and store enough for several years’ production.

As Strategist contributor Todd Newett has written, Australia should not rely on supply from distant friends for the battlefield staple that is the 155 mm shell. If we suddenly need more such shells, we may find that our foreign suppliers do, too, and are reluctant to part with components that we can’t make.

Moreover, 15,000 rounds a year are not nearly enough. Even the formerly desired capacity of 100,000 a year wouldn’t have been enough to feed Australian artillery fully employed in a war. The full rate works out at 3.5 shells per day for each of the 78 guns of 155 mm calibre that the Australian Army has or is buying. The army’s new Huntsman self-propelled guns can shoot three shells in 15 seconds.

It’s clear that we need a large war stock, so we need to buy as many shells as our industry can make. What Defence must do, then, is talk to Rheinmetall Nioa Munitions about greatly stretching its capacity.

There’s another reason for ordering from Rheinmetall Nioa Munitions. A purchase contract will show other companies that investing in Australian military manufacturing capacity or technology brings a good chance of getting orders.

Defence is pretty clearly hinting that the shell project will be expanded in another direction, to making and hopefully exporting at least the bodies of 127 mm shells for the globally common 54-calibre naval gun. The government’s Thales-managed shell forge at Benalla, Victoria, can make 127 mm shell bodies. Also, Nioa said in 2022 that it would receive technology from Germany’s Diehl for making that company’s 127 mm shells, including high explosives and propelling charges.

Self-reliance for Australia and encouragement of local producers would be two advantages of these measures. A third would be helping to meet 127 mm demand, which would please many of our friends. And a fourth benefit would be sending a signal to Washington that we’re stepping up our defence effort.

The values involved here are not great, perhaps only tens of millions of dollars for manufacturing facilities and hundreds of millions for the shell orders. But putting money into shell production would at least be something that Prime Minister Anthony Albanese could show Donald Trump when, at some point, they meet for the first time.

Indeed, by addressing an ammunition shortage, the spending plan may be appreciated more than its dollar value would suggest.