The Defence Industrial Base

by David Archibald

22 February 2025

 

Australia’s GDP is up there. We were the 13^th largest economy in 2024, between Russia and Spain in trillions of US dollars:

1. 1. 1. 12. Russia:      $1.78 trillion
         13. Australia:  $1.72 trillion
         14. Spain:        $1.70 trillion

We should also take inspiration from the Ukraine War. Ukraine’s GDP in the last year before the start of the war was one ninth the size of Russia’s GDP, but Ukraine has been able to prevail.

Australia’s GDP is likely one sixth the size of China’s, if we take out the one billion poor in China and the 30% of their economy that is building empty apartment blocks. Plus there is 4,000 km of seawater for them to cross before they get here. Australia alone could hold off China if we made wise choices from here. The missiles needed to sink a warship cost about 5% of the cost of the warship. To paraphrase Sun Tzu, all you need is enough missiles to fling at the oncoming Chinese ships and you need not fear the outcome of 100 battles.

We have a really big problem though. For a country that has a war with China on its 2027 bingo card, we almost no industrial base for military production and we produce only a fraction of the fuel we will need. The latter problem is relatively easily fixed — install a lot of Bergius plants around the coalfields and make our own diesel, petrol and jet fuel. Germany did that in WW2 but made the mistake of building most of their capacity after the war started. Let’s not repeat that error.

 

Figure 1: German synthetic fuel production 1938 – 1945

 

Missiles consist of a warhead, the propellant, casing, guidance system etc. So what’s involved in making all that? A missile weighing one tonne will have a warhead at about 20% of its weight so that is 200 kg. The warhead might be 150 kg of fragmentation steel and 50 kg of explosive. One popular choice for the explosive is composition B, which is RDX and TNT in a 60:40 ratio. Of the balance of the missile, 750 kg will be propellant, with that being 70% ammonium perchlorate, 14% polybutadiene binder and 16% powdered aluminium.

Ammonium perchlorate has the formula NH₄ClO₄ and is produced by the reaction of ammonia with perchloric acid. Australia has a number of ammonia plants operating, mostly for the manufacture of ammonium nitrate as explosives for the mining industry. The hydrogen for the process is supplied by steam reforming of natural gas. Ammonia production in China is coal-based and has twice the capital cost of natural gas-based steam reforming.

As the price of natural gas can be expected to rise to the oil price in energy-content terms in an oil-constrained world, we might as well base our hydrogen supply on electrolysis of water instead of steam reforming of a fossil fuel. A scoping study for the expansion of an existing ammonium nitrate plant near Moura, Queensland found that a 30 MW electrolyser capable of producing 3,500 T/y of hydrogen operating at an 80% load factor with 16 hours of hydrogen storage could feed a 20,000 tonne per year, small-scale ammonia plant. The electrolyser would consume 208 GWh of power, translating to 59.4 kWh per kg of hydrogen production. The often-quoted price for the cost of electrolytic hydrogen is that power at $0.05 per kWh will produce hydrogen at $7.00 per kilo. With the operating overhead of the plant being $4.00 per kilo, this does translate to $7.00 per kg.

The nitrogen would be produced by cryogenic fractionation of air. In the Haber-Bosch process to produce ammonia, hydrogen and nitrogen are combined at a pressure of 450 bar and 450˚C in the presence of an iron-based catalyst. The new ammonia plants should be located in the Murray Basin and a long way from the coast. Albury would be ideal. Supply security will be achieved by making plants at the inflection point in the capital cost/tonne of product to operating cost per tonne plot. Normally, doubling the size of a plant will reduce the capital cost per tonne of capacity by 30%.

To make the perchloric acid is a bit more complicated. A concentrated solution of salt (sodium chloride) is electrolysed to produce sodium chlorate and hydrogen. Sodium chlorate is NaClO_3. It is electrolysed again to add another oxygen atom to make sodium perchlorate NaClO_4. The next step is reacting that with concentrated sulphuric acid to make perchloric acid. Making sulphuric acid requires a source of sulphur. That is produced from either smelting sulphide ores or sulphur imported from oil refineries processing heavy crudes. It is also possible to use iron pyrite as the source of sulphur and there are large deposits of pyrite in Australia. The sulphuric acid so produced would be trucked and railed to the Albury region. Ammonium perchlorate starts decomposing at 130˚C.

The next step is making the polybutadiene to serve as the binder for the solid rocket fuel. This starts with steam cracking of pentane (C₅H₁₂) at 850˚C with butadiene (C₄H₆) as one of the products. The pentane would be a byproduct of the Bergius plants we need for producing our own fuel. The next step is polymerisation in which butadiene molecules are linked together to produce long polymer chains. This is done by using an organic solvent such as hexane or toluene as the reaction medium with neodymium, cobalt or nickel catalysts. For every tonne of ammonium perchlorate produced, we need 200 kg of polybutadiene.

The third component of our solid rocket fuel is powdered aluminium. This should be easy. Australia has four operating aluminium smelters which produce 1.5 million tonnes per annum. If all that was applied to making powdered aluminium for solid fuel rockets of a tonne each, that is enough for 12.5 million missiles. There is a catch. Those four smelters consume 10% of the electric power in the National Electricity Market on the east coast. The cost of power has doubled because of the leap of stupidity that is Net Zero, and so keeping the smelters open requires them to be heavily subsidised. The closure of industry due to the cost impost of Net Zero was easily predicted, such as by Brian Fisher’s report of May 2019 entitled Economic consequences of Labor’s Climate Change Action Plan.

Perhaps sanity might return before permanent damage is done. But in a world abandoned by reason, hope is not a plan. In the case that all the smelters close as a result of Net Zero, perhaps scrounging up aluminium from used beverage cans can provide a stopgap source until a smelter is reactivated. Most of the aluminium cans currently collected as scrap are used as an oxygen-getter in steelmaking.

Powdered aluminium is made by melting aluminium to above its melting point of 660˚C and pumping it through a high-pressure nozzle with an inert gas such as nitrogen. This produces spherical powder particles.

In essence, our ability to fling missiles at our enemies is determined by our ammonium perchlorate production. Roughly, a one tonne missile would take 525 kg of ammonium perchlorate. So if we produced 1,000 tonnes of ammonium perchlorate per day we could fling 2,000 missiles per day at our enemy.

Next up is the warhead which we assume weighs 200 kg, including the electronics. The active part will be 100 kg of steel containing 50 kg of composition B. The steel will be patterned to fragment upon detonation. A warheads is not solely explosive because if it was just explosive then the expanding ball of gas from the explosion would slow down rapidly in pushing against the air. By surrounding the explosive with steel, most of the force of the explosion is transferred to something hard with a high specific gravity. The steel fragments are accelerated to Mach 3 and are able to do much more damage than an explosion that is just expanding gas.

If we were producing 1,000 missiles per day of one tonne each, that would take 100 tonnes of forged steel per day. The blast furnaces at Port Kembla produce 13,000 tonnes of iron per day, so steel supply should not be a constraint.

Explosives for defence are made in two facilities run by the Australian offshoot of the French firm Thales. One is located in Mulwala, 50 km west of Albury, and the other in Benalla, 100 km southwest of Albury. Most of the explosives produced are combinations of RDX and TNT in the range of 60:40 to 80:20, with some formulations including powdered aluminium. RDX has a higher detonation velocity that TNT, 8,750 metres per second compared to 6,900 metres per second, so it has a high brisance, the ability to shatter things. Combining RDX with TNT lowers the sensitivity of the explosive and TNT’s melting point of 80˚C allows it to be melt-poured into shells and warheads. The company Orica, headquartered in Melbourne, produces bulk explosives for the mining industry, some of which could be adapted for military use.

 

Figure 2: The chemical structure of RDX and TNT

 

With respect to guidance systems for our missiles, we need to make our own silicon chips, because a large chunk of the world’s production capacity will be taken off line when China attacks Taiwan. Ukraine has also come to the realisation that it needs its own supply of semiconductors and has priced a facility to make 180 nm, 130 nm, and 110 nm chips at US$1 billion. Our guidance systems will need to combine GPS, inertial navigation and terrain-matching modes as applicable.

Our number one priority in missiles is to make our own air-launched ballistic missiles with a maritime seeker head to target Chinese ships. These would use GPS with inertial navigation backup to guide them to where the target is. Then infrared image matching and radio-frequency location, in effect using the enemy ships’ radar to locate them, would find and lock on to the target. The story so far is that Australia contributed to the development of the PrSM missile, including Increment 2 to target ships, and will be making those missiles in Australia in a Lockheed Martin facility.

As a ground-launched missile, PrSM has a range of 600 km for its 91 kg warhead. PrSM Increment 2 was test-fired from Palau in May 2024 against ships at sea. The problem is waiting for enemy ships to come closer than 600 km before we can target them. If air-launched, the range will likely double to 1,200 km. And then the total range is only limited by the range of the launching aircraft. If that was 3,000 km, then the total range of the system is 4,200 km. An aircraft taking off from Darwin could attack ships in the Taiwan Strait. The experience in Ukraine is that cruise missiles such as the Russian Kh-101 are relatively easy to shoot down, and that may also be true of the cruise missiles we have in stock. A ballistic missile plunging vertically at Mach 5 would be harder to defeat.

We also need an air-launched ballistic missile larger than the PrSM. The centreline hardpoint of the F-15EX is good for up to 2.25 tonnes. A missile of that size might have a range of 2,000 km. The experience in Ukraine is that the longer the range of your missiles, the further away you push enemy forces. American missiles tend to be hobbled by either the length of the installed base of MLRS launchers of four metres, or the length of the F-35 bomb bay which is also four metres. Australia needs to break free of that to achieve greater range. To make logistics as easy as possible from here, we should make a family of missiles tuned to carriage and launch from 20 foot containers. This will allow the civilian truck fleet to be used as launch platforms.

Two more things are needed to put our missiles together. Planetary mixers and solid fuel rocket motors. Planetary mixers are required to mix the high-viscosity solid rocket fuel evenly. The Hezbollah underground rocket-making facility in Syria destroyed by Israeli commandos in 2024 included planetary mixers. In solid fuel missiles, the fuel burns from the centres of the missiles outwards towards the casing with the burn time likely being about seven seconds. The role of the solid fuel rocket motor is to direct the exhaust gas flow to maximise thrust. This is usually made of graphite which has plenty of potential sources in Australia. The solid fuel rocket motors would be best made in a dedicated facility and then shipped to the missile assembly plant.

Australia is building a facility for making M31 missiles for HIMARS launchers. This will be run by Lockheed Martin, which is like putting a fox in charge of the hen house. As 70 people will be employed to produce up to 4,000 missiles per annum, this suggests that they are only doing some sort of final assembly and that there will be little transfer of technical knowledge involved.

Beyond blast/fragmentation warheads, we also need thermobaric and cluster munition warheads. Thermobaric warheads can be cost-effective when you have a soft target that can’t be serviced by a fragmentation warhead, such as troops in trenches. Half the weight in high explosive is the oxidant. If you can use oxygen from the air instead, that doubles the explosive force for the same weight of warhead. An over-pressure of 5 psi will cause serious injuries and lung damage. Thermobaric warheads also provide an extended over-pressure duration. The area of a 5 psi over-pressure or more will be 50% larger for a thermobaric warhead than a high explosive warhead.

A thermobaric warhead might detonate at a height of 5 metres and produce a cloud of 80% heptane and 20% propyl nitrate as a volatiliser, which is then ignited by a secondary charge. To make propyl nitrate, the process starts with the fermentation of sugar to produce 1-propanol which is CH₃Ch₂CH₂OH. The next step is mixing the 1-propanol with concentrated nitric acid and concentrated sulphuric acid cooled in an ice bath. The organic layer that separates out is dried over anhydrous magnesium sulphate. Heptane (C₇H₁₆) will be produced by the Bergius plants we will be building for our fuel supply.

Cluster munitions were adopted in the US Army as a consequence of the Yom Kippur war of 1973, which showed the potential for rapid armoured breakthroughs. Missiles with a 30 km range and a cluster munition warhead were developed as an assault breaker weapon to stop enemy tanks from overrunning the artillery line, by eliminating their accompanying infantry. Originally cluster munitions had a purely mechanical arming mechanism, which had a high dud rate. These days they have an electronic arming system with a zero dud rate. Nevertheless, the US Army developed a non-cluster Alternate Warhead (AW) with 180,000 tungsten pellets. The AW variant only services an area a quarter of that of the cluster munition warhead and so is only a quarter as effective for the same cost. Militaries that are serious have cluster munitions, both missile and artillery-delivered. Ukraine happily uses cluster munition artillery shells to hit crews that have abandoned armoured vehicles disabled by FPV drones. We could make our own cluster munitions under licence from South Korea or Turkey.

We also have a lot of work ahead of us in getting our tube artillery ready for the next conflict. What Ukraine has shown is that wheeled artillery systems are better than tracked systems, such as the K9 Thunder we are acquiring, which in turn are better than towed systems such as the M777. The reason for the hierarchy is that the Ukraine War has shown that enemy counter-battery radar and artillery can return fire within three minutes of your own tube artillery firing. Wheeled artillery systems can move off far faster and further than tracked systems. They can also usually drive themselves to repair shops in the rear whereas tracked systems will need to be loaded on a low loader.

The rise of drones means that systems will be located as far back from the front line as possible. To remain effective, the range will need to be increased. This can achieved by making subcalibre rounds, such as 105 mm rounds for a 155 mm barrel with the addition of staves out to the 155 mm diameter of the barrel. The staves convert the kinetic energy of the round to lift, greatly extending the range. German experiments at Peenemunde in WW2 with staves on rounds in 230 mm barrels achieved a range of 120 km. Back then the normal dispersion of rounds with distance meant that this development was militarily useless. These days there are GPS/inertial navigation system-guided fuses than can get rounds to land within 10 metres of the target no matter what the distance and the wind conditions.

 

Figure 3: Israeli Top Gun course correction fuse

 

There are a number of wheeled, 155 mm self-propelled howitzers made in Europe now, including the French Caesar, the Swedish Archer, the Czech DITA, and the Ukranian Bohdana. Australia’s best bet may be to make the Archer under licence.

Australian has made a half-hearted start to artillery shell production. In 2022, a joint venture between the German company Rheinmetall and Queensland company NIOA Munitions commissioned a plant making 40,000 155 mm artillery shells per annum with the potential to go to 100,000 shells per annum on three shifts. The steel to make the shells is imported from Germany and we only make the shells. We don’t make the fuses, the explosive fill, the propellant charges or the primers. As is, the setup is useless militarily. The empty shells are sent to Europe for load, assembly and pack. While we send empty shells to Europe, the Army’s 155 mm needs are imported from South Africa, a country that might cease to function soon.

We are building a similar factory at the Benalla Munitions Facility, which will start making 15,000 shells per annum from 2028, expandable to 100,000 shells per annum. The necessary propellant charges and fuses might also be made at Benalla. The propellant charges are mostly nitrocellulose with supplementary nitroguanidine and nitroglycerine. Nitrocellulose is made by reacting cotton with a nitric acid/sulphuric acid mix at about 30˚C. The process replaces the hydroxyl groups on the cellulose with nitrate groups. Explosive quality nitrocellulose starts from 13% nitrogen. Fortunately Australia produces a lot of ammonium nitrate, for mining explosives and fertiliser, and makes several hundred thousand tonnes of nitric acid to that end. Nitric acid is made by oxidising ammonia over a platinum-rhodium gauze.

A complete shell is made of 36 kg of steel for the body, 11 kg of TNT as the energetic filler and a fuse of 1 kg or so. Thus, the explosive is a quarter of the total weight.

We also need to make our own course correction fuses for 155 mm artillery. One of the reasons is that current US pricing is extortionate, with recent sales at about US$13,500 each for a weight of 3.1 kg which equates to over US$4,000 per kg. The production cost is likely to be more like US$500 each, or less.

With respect to the scale of what is required, if we had 10 combined arms brigades each with 30 tube artillery pieces that fired an average of 20 155 mm rounds per day, that amounts to 6,000 rounds per day which equates to 2.2 million per annum. To produce that many shells would require at least a ten-fold increase in our possible production rate. We would be best served by producing flat out now to build stocks.

By comparison, in 2023 Ukraine’s 300 artillery pieces fired about 7,000 shells a day, an average of 23 per gun per day. They would have fired a lot more if more shells had been available. At the start of the Ukraine War, Russia was firing up to 60,000 shells per day.

To provide 6,000 shells to the troops each day would require 216 tonnes of steel for the shell bodies, 66 tonnes of TNT per day for the explosive fill and 48 tonnes per day of nitrocellulose in 2 kg bags for the propellant.

If a country liked its own troops and wanted the best for them, then they would provided with plentiful artillery so that the artillery did most of the work on the battlefield and the troops didn’t have to do anything excessively dangerous.

To give an idea of the scope of requirements for war with China, we need to build towards these rates of the industrial basics as soon as possible:

To give context to that requirement totalling 3,300 tonnes, in 2024 Australians bought an average of 3,300 new cars per day. At an average weight of two tonnes, that is six thousand tonnes per day of complicated machinery with up to 50,000 individual parts, down to the smallest screws. The most basic metric of our warfighting ability, of our continued existence as a sovereign nation, is our production of ammonium perchlorate.

At the next level up, the production of precision guided munitions, and the platforms they are fired from, is largely a matter of our stock of computer numerically controlled (CNC) machines. Take the example of the Krasnoyarsk Machine-Building Plant in Russia, which makes intercontinental ballistic missiles (ICBMS). This is how the workload is broken up by process:

 

Figure 4: Manufacturing processes of the Krasnoyarsk ICBM plant

 

Making ICBMs is largely a matter of casting alloys into a near-net-shape of the final part, machining that in a CNC machine and then assembly. These three simple processes account for two thirds of the total production workload. Making precision-guided-munitions is so simple that Russia recently imported 1,000 Ugandan females to work in its weapons factories. Ugandans have an average IQ of 76, which is only 7 IQ points above retarded. Yet they can still have a role in making sophisticated weapons because, thanks to the CNC machines, each step in the process is simple and repetitive.

Of course, quality control in the other processes is important too, illustrated by the fact that some of the ICBMS in one Chinese silo complex were found to have water in their fuel tanks, which seemingly had not been drained after hydrostatic testing.

Australia doesn’t have to make its own CNC machines; we just have the right ones installed and operating before the war starts, and fund the buildup of finished stock in the meantime. There is one Australian CNC machine maker, ANCA based in Melbourne, that has supplied to the Russian defence industry. ANCA specialises in making machines that produce cutting tools for other producers’ CNC machines. Amongst other Australian companies, Tekcel makes CNC routers, Multicam Systems makes CNC routers, BlueCarve CNC makes CNC routers, lasers and plasma cutters.

As the following graphic shows of the relative size of CNC machine exporters in 2019, Germany and Japan are biggest suppliers due to the quality of their product and ease of use:

 

Figure 5: Relative size of CNC machine exports by country in 2019

 

The fate of the Russian defence industry after the start of the Ukraine War illustrates the need to be prepared before the war starts. Prior to the dissolution of the Soviet Union in 1991, the Slavic communists were spending 20% of their GDP on defence, largely funded by their oil production of 11 million barrels per day. After the dissolution, Russia preferred to limit its defence spending to 5% of GDP. The failure of Ukraine to collapse has forced Russia to go to a war economy that is taking 50% of GDP. It has also had to rebuild its defence industry.

In 2021, Russia imported 2,865 CNC machines, with 43% of these from China. By 2023, CNC machine imports had risen five-fold to 15,329, with 76% of these from China. Recently Russia has been scouring China for twenty-year-old Japanese CNC machines to bulk up its industrial base. Traditionally the Russians had shunned Chinese CNC machines because they lacked the capability of the German and Japanese equipment.

3D printing of components can be a solution but parts are more expensive than if near-net-shape parts are made in an injection moulding machine and then finished on a CNC machine.

Following is a list of battlefield consumables we should be making now. It is a guide; it is not meant to be an exhaustive list:

 

David Archibald is the author American Gripen: The Solution to the F-35 Nightmare