The Australian Department of Defence is set to enter into negotiations with Thales Australia to ensure continued management and operation of the munition factories in Benalla, Victoria, and Mulwala, New South Wales.

The munitions factories are owned by the country’s defence industry and manufacture ammunition for the Australian Defence Force (ADF).

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Australian Defence Industry Minister Christopher Pyne said that employment across the Benalla and Mulwala facilities has increased with more than 80 new opportunities created last year.

Pyne added: “With both facilities employing over 640 highly-skilled workers, this announcement provides certainty for workers that both factories will remain open for the long term.”

“The negotiations with Thales will allow the Australian Department of Defence to continue capitalising on the more than $1.8bn investment it has made since the mid-1990s.”

According to Pyne, about 130 local small-to-medium enterprises (SMEs) are part of Thales Australia supply chain that offers an array of goods and services to the two ammunition factories.

Pyne further said: “The negotiations with Thales will see a new strategic arrangement for the management and operation of the factories, improving price competitiveness and increasing export potential for Australian-manufactured ammunition and explosive products.

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“This long-term, performance-based arrangement will provide a greater degree of certainty for Thales as the principal tenant and operator of the facilities and will enable seamless transition from the current contract when it expires in mid-2020.”

The negotiations with Thales will allow the Australian Department of Defence to continue capitalising on the more than $1.8bn investment it has made since the mid-1990s.

Under the arrangement, the underutilised areas of the factories are expected to be sub-leased as additional precincts to other ammunition manufacturing companies.