Australian steel is set to be used in a $35 billion project to build nine Hunter Class Frigates in South Australia after a deal was signed with BlueScope Steel AIS.

More than 1500 tonnes of steel plate will be delivered to ASC Shipbuilding, a subsidiary of BAE Systems Australia, under the $2.6 million contract.

BlueScope chief executive Australian Steel Products John Nowlan said the steel would be supplied for the prototyping phase of the program, where five representative ship blocks are being built at the Osborne Naval Shipyard in Adelaide.

“The company has a long and proud history of supplying steel into defence projects – in the 1990s we supplied more than 20,000 tonnes of steel into the original ANZAC-Class Frigate fleet that the Hunter Class ships will replace,” Nowlan said.

He said the contract was an important first step for BlueScope in potentially supplying steel into the build phase of the nine submarine hunting warships.

“Manufacturing is a key part of Australia’s history and today BlueScope is not only a world class manufacturer but we are also internationally competitive,” Nowlan said.

BlueScope now has more than 100 facilities in 18 countries, employing around 14,000 people globally.

ASC Shipbuilding is designing and building nine Hunter Class ships, which will be among the world’s most advanced anti-submarine warfare frigates, for the Royal Australian Navy.

The contract is the first awarded to Australian businesses in the lead up to the Hunter program beginning with the five representative ship blocks built at the Osborne shipyard over two years.

It follows news of the first new construction shed Building 20 being finished in the $500 million upgrade of the shipyard  and the handover to ASC Shipbuilding getting underway.

Five new sheds in the shipyard are being fitted with cutting edge construction equipment, and ASC Shipbuilding director Jim Cuthill has said the site’s builders Australian Naval Infrastructure and Lend Lease were on track for a complete handover in July.

ASC Shipbuilding managing director Craig Lockhart said the new steel contract was one of many to be awarded to Australian businesses in coming months “as we count down to prototyping cut steel in December”.

“This is a significant milestone and in awarding this contract to BlueScope Steel AIS we are confident that we have selected the company with the best capability while meeting our commitments to supporting Australian business and maximising Australian industry capability,” Lockhart said.

“During the prototyping phase we expect to spend 90 per cent of the value of the work required to construct the test blocks in Australia, and I hope today’s contract signing is the start of a long-term relationship with BlueScope Steel AIS.”

Building of the first frigate is expected to start in 2022 and more than 1,000 Australian suppliers have registered through the Industry Capability Network Gateway to compete for work on the frigate program.

Lockhart said the program was “more than just building warships; it is about building and enduring and uniquely Australian sovereign industrial capability that will support Australia’s continuous naval shipbuilding strategy for generations to come.”