Two senior ministers stand accused of sitting on their hands as China seeks to swoop in and buy a major South American missile manufacturer that could still come to Australia if the federal government acts swiftly.
The move by Norinco – the main supplier of Chinese weapons – to attempt to buy cash strapped Brazilian manufacturer Avibras has turned what could have been an unprecedented defence acquisition by an entirely sovereign owned Australian company, into a potential national security threat.
Should China be successful, insiders believe it would equip the People’s Liberation Army with the intellectual property needed to modernize its soviet era guidance systems and manufacture long range coastal strike weapons deemed ideal for a strike on Taiwan.
“It is deeply concerning that my warnings and requests seem to be falling on deaf ears,” said Travis Reddy, CEO of Australian company DefendTex whose exclusivity period to buy Avibras expires at the end of the month, unless he can get urgent Commonwealth support.
For 18 months he has been asking the Government through Export Finance Australia to loan DefendTex the additional $70m it needs to close the roughly $200m deal, pledging to repay the money plus interest with contracts already signed within 12 months.
The fears of the CEO, who is also a defence veteran, seem well founded. Sky News has seen a secret letter between the Chinese State-owned company, Norinco and the Brazillian defence Minister, José Múcio Monteiro Filho.
Translated from Portuguese, Norinco’s Vice President suggests “a government-to-government agreement … financed through the government of China”, making clear Chinese Communist Party’s ambitions to purchase the distressed asset.
Appearing to sweeten the deal, Beijing also offers to manufacture Chinese weapons in Brazil, promising “the full integration of Chinese products with the Brazilian Army systems.”
The Prime Minister has confirmed officials are looking at a loan that would see an Aussie defence company acquire a Brazilian weapons manufacturer, but time is now down to days to make it happen.
As Sky News revealed, Victorian based DefendTex, has spent 18 months working to acquire distressed South American arms manufacturer, Avibras.
With decades of experience, Avibras is known for its tubular rockets, guided missiles, and coastal defence systems. Its website spruiks a successful space program in partnership with the Brazilian government, dating back to the 1960s with hundreds of launches to its name.
Unable to approach a bank, DefendTex has continued to request the Australian Commonwealth provide it with a $70m line of credit on commercial terms through Export Finance Australia to close the roughly $200m deal.
Defendtex has offered to repay the loan plus interest in 12 months, based on already signed contracted sales.
The Defence Minister, Richard Marles and Defence Industry Minister, Pat Conroy have avoided responding publicly to the issue. However, when Kieren Gilbert asked the prime minister on Sky News, Anthony Albanese acknowledged the matter was being considered but refrained from offering support.
“Well Export Finance Australia are looking at that proposal. We are big supporters of our defence industry,” he said.
“Part of our agenda for a future made in Australia is about renewables, it’s about manufacturing, it’s about our defence industry, our pharmaceutical industry.”
DefendTex’s CEO, Travis Reddy responded from Paris, where he is now seeking European support, publicly stating he’s trying to prevent the asset from falling into Beijing’s hands, and its state-owned company Norinco, who recently wrote to Brazil’s Defence Minister to signal its keen interest in buying the distressed company.
“Prime Minister, the government has had over 12 months to review the details of this proposal. The time for thinking about it over,” he said.
“This one simple move will prevent the technology falling into the hands of China.”
Frustrated local defence experts this week threw their support behind DefendTex who already exports armed drones and loitering munitions to the United Kingdom and United States.
“It’s clearly a robust company that the Australian company is looking at (Avibras), so why would we not want to invest in it,” Brent Clark, Australian Industry and Defence Network CEO told Sky News.
Michael Shoebridge from Strategic Analysis Australia accused government ministers of being “asleep at the wheel,” and behaving like prisoners of Defence headquarters in Canberra.
“They can’t see this incredible opportunity that an Australian company has seen,” Mr Shoebridge said.
“It’s depressing and disappointing that the government isn’t willing to back the company by providing export financing, effectively a cheap loan. It doesn’t even have to spend the money, it will get the money back.”
The former Director of the Australian Strategic Policy Institute tied the government’s slow response with a failure to acquire a legitimate strike capability defence experts have been calling for.
“For all the talk about our dangerous security environment, and the need to increase the military power. The government is failing to even loan money, let alone put its money where its mouth is.
“The Chinese government is willing to back its own defence industry to get hold of this Brazilian company, partly because they see the technological advantages, but no doubt partly to frustrate what they think is a much smarter government who they would assume would be backing our own Australian company, DefendTex.”
Mr Shoebridge pointed out an underlying problem many inside the frustrated sector privately whisper, but rarely say publicly for fear of persecution, that foreign allied governments are more likely to acquire Australian weaponry and tecnnology than our own ADF who insist on buying from America.
“DefendTex is making successful products right now that are being used in places like Ukraine. They are being used by the British army, but our government and military has failed to buy them.
“Our government is going to be spending about $100-billion on guided weapons and missiles over the next couple of decades if we stay in peace, and it’s likely the best we are going to do is assemble some American ones here.
“This is an opportunity to have some real sovereign missile manufacturing technology and capability that will make us more secure and maybe some of the $100-billion of Australian taxpayer money can go to Australian companies equipping our military. That’s a future the government should be falling over themselves to achieve,” Mr Shoebridge said.
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