Australia needs to urgently reorient its national munitions manufacturing program to build interceptor drones for dealing with cheap strike drones. This is the deafeningly loud message coming from wars in Ukraine and Iran.
Australia should be looking for cooperation in this area with other countries that share its strategic challenge, China’s armed forces. But first priority should go to rapid domestic mobilisation, and the place to go for policy and technical guidance is Ukraine.
Warfare has changed out of sight since the munitions program, called the Guided Weapons and Explosive Ordnance Enterprise (GWEO), was launched in March 2021. The rise in Ukraine of propeller-driven cruise missiles, such as the Iranian Shahed, has blown apart the always shaky economics of firing at least one multi-million-dollar rocket-propelled interceptor at each incoming strike weapon.
Just how implausible the policy has become is now widely reported in even the general press. US PAC-3 interceptors cost US$3.7 million (A$5.3 million) each. But there have been cases in the war with Iran this year of them being used against Shaheds costing no more than US$50,000.
As experience in Ukraine and the Middle East shows, the Shahed’s warhead, 50 kg of high explosive or up to 90 kg on later Russian versions, can flatten an apartment or knock out a substation. On 24 March 2026, Russia launched nearly 900 such weapons at Ukraine in one day. Iran fired Shaheds at US forces and Gulf bases during this year’s war with the United States and Israel. And in May, a Russian derivative of the Shahed struck a residential building in Romania, a NATO member.
As Peter Layton has pointed out in The Strategist, Australia, too, is in the shadow of the Shahed. Such weapons could appear in range of Australia and its deployed forces. China is already building its own Shahed-class drones, among them the Loong M9 and the Sunflower-200, and could out-produce Russia many times over.
The Australian government has already begun to move. In the past few months, it has more than doubled planned counter-drone funding to about A$7 billion and in April backed two local firms: AIM Defence, with its Fractl counter-drone laser, and SYPAQ, maker of the Corvo Strike drone interceptor built to hunt larger attack drones of the Shahed kind. These remain experimental systems, though, and the Corvo Strike is a single developmental contract, a long way from the cheap, multi-thousand-units production needed to meet serious Shahed-style swarms.
Ukraine knows best what to do. It fights cheap masses of incoming weapons with cheap masses of interceptors, such as the Sting. This electric, propeller-driven weapon is guided to its target by a pilot who, wearing first-person-view goggles, flies it into the drone, detonating a contact or proximity fuse with the help of a thermal camera and, increasingly, AI-assisted terminal guidance. Its cost is just US$2,100.
But Ukraine’s production technology and techniques are as important as its designs, because part of the challenge is to build quickly and cheaply.
This is where GWEO needs to pivot. It was set up with ambitions for eventually making elaborate and costly weapons in Australia. It still needs to do that, but now there’s another urgent scaling-up job for it. This also means that the domestic industry must evolve, or maybe just that new manufacturers need to be brought into Australian munitions production. Ukraine has mobilised companies that formerly made civil products or didn’t exist at all. For example, the Wild Hornets company, formed during the conflict, builds thousands of Sting interceptors a month.
Australia may need to make at least 10,000 Sting-like interceptors, since it’s not hard to imagine a country with China’s resources building many times that number of strike drones and directing a large fraction of them southwards. If Australia can learn well enough from Ukraine, the program cost might still be A$100 million, allowing for Australian wages. This would be a modest sum by the standards of Australian defence acquisition.
The manufacturing timescale needs to be not a few decades but a few years, at most.
As development and production proceeded, the Australian Army would need to learn how to use such weapons. Again, the know-how should come from Ukraine. Most likely, the Australian Reserve Forces would become the main organisation for employing interceptor drones. In both cases, hard decisions would need to be made about expanding the force or dialling back other capabilities.
Another lesson from the war in Ukraine is that countermeasures and counter-countermeasures come and go fast. A GWEO interceptor-drone effort would have to be ready to adapt the design of its product or adopt an entirely new one.
Designs of greater sophistication than what Ukraine is now using may be needed. At some point, Australia should collaborate with Japan and Taiwan on hardware and software, even if each keeps full manufacturing at home.
International cooperation is itself an impediment to speed, so it should not be part of an initial development effort. But the time to prepare for cooperation is at the outset.