Hanwha Defence will manufacture the 129-vehicle fleet at its facility in Geelong, defeating German rival Rheinmetall, whose operations at Redbank build the Boxer vehicle for the Australian Army.

Rheinmetall had previously won a contract with Defence to deliver and support 211 Boxer 8×8 Combat Reconnaissance Vehicles (CRV) for the Australian Army. The first vehicle rolled off the production line recently.

In the latest deal with Defence Hanwha has won the right to build its Lynx vehicle, which had always been the frontrunner. About 1000 jobs were expected to be generated.

The cost is expected to be between $5 billion and $7 billion.

The manufacture of the Redback vehicles will be in the seat of Corio, held by Defence Minister Richard Marles.

Marles recused himself from considerations to avoid a conflict of interest.

The original plan was to acquire 450 infantry fighting vehicles but that was cut back following a military review earlier this year.

Defence Industry Minister Pat Conroy described it as one of the largest projects in the army’s history.

“To maintain our national security, we need to be able to build critical defence capabilities here rather than relying on overseas supply chains,” he said.

The vehicles are capable of protecting soldiers, manoeuvring in coastal areas and firing long-range.

“The interlocking capabilities will modernise the Australian Army to operate in a coastal environment that will place the army at the heart of our strategy of deterrence,” Conroy said.

Chief of Army Simon Stuart said the deal was a big step forward.

“Our recommendation to government was that the Redback best met the full set of requirements to deliver a relevant and credible combined arms fighting system,” Lieutenant General Stuart said.

The next generation vehicles will replace Vietnam War-era armoured personnel carriers still in use by the army.

The first of the vehicles will be delivered by early 2027, with all 129 to be completed by late the following year.

The announcement coincided with the 70th anniversary of the Korean War armistice, with Opposition Leader Peter Dutton urging the nation to never forget the sacrifice Australians paid to “defend those who desired self-determination and liberty”.

Australia Defence Association executive director Neil James described the vehicle deal as strategic and said the decision to reduce the scope of the program was a “silly” one that would need to be corrected down the track.

He described the amount of money being spent over the project’s lifetime as “minor” when compared to social security or other budgetary measures.

Hanwha Defence Australia Managing Director Richard Cho said the partnership would deliver world class vehicles.

“The selection of the Redback for the Australian Army is an exciting milestone not just for soldiers as it also cements the closer ties between Australia and the Republic of Korea,” he said.