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Japan's MHI opens Australian unit as Canberra ponders subs deal

[TOKYO] Japan's Mitsubishi Heavy Industries (MHI) on Friday said it has established a unit in Australia as Canberra weighs bids from Japan, France and Germany for a A$50 billion (S$52.46 billion) submarine contract.

MHI Australia will focus on power generation equipment, logistics equipment and joint research projects, and would help to "integrate MHI Group's full technological strengths," MHI President Shunichi Miyanaga said in a press release.

To bolster its chances of landing the contract to build 12 new submarines for Australia - one of the world's most lucrative military deals - Tokyo wants Japanese firms to seek industrial ties beyond the submarine and defence sectors.

Australian Prime Minister Malcolm Turnbull has expressed hopes the submarine project will help spur industrial innovation as a slowdown in China's economic growth threatens demand for coal and other resources that underpin the Australian economy.

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Japan is offering a variant of its Soryu submarine built along with Kawasaki Heavy Industries. French state-owned builder DCNS has proposed a conventional version of its Barracuda nuclear-powered boat, while Germany's ThyssenKrupp (TKMS) has offered a modified version of its Type 214 class vessel.

A decision on the politically sensitive plan is expected within months, possibly ahead of a national election in which the deal and the jobs it will create are expected to be a key issue for the conservative government.

A Soryu submarine arrived in Sydney Harbour on Friday ahead of an 11-day military exercise with Australia's navy. The first visit to Australia by the Japanese vessel is seen by analysts as a bid to burnish Japan's submarine bid.