Australia’s newly announced $5 billion deal to buy 200 German tanks is good news for ASX defence junior Bisalloy Steel — which will supply bullet-proof steel for the project.

German contractor Rheinmetall will build the 211 armoured vehicles in Ipswich, west of Brisbane.

“Australian businesses will be big winners in Victoria and in Queensland, but also in other states,” defence minister Christopher Pyne said at the announcement earlier this week.

One of those winners is Bisalloy, which will supply bullet-proof steel for the Boxer Combat Reconnaissance Vehicles.

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“As the only Australian manufacturer of quenched and tempered high performance steel plate, knowing our product can again be protecting Australian soldiers is a tremendous source of pride for our company and builds on our long history of supplying our specialist steel to critical defence applications,” chief Greg Albert told investors.

Steel supply for the new vehicles won’t be needed until the end of the year. First delivery of the BOXER vehicles is expected in 2020.

Bisalloy shares (ASX:BIS) jumped 15 per cent from 90.5c on Wednesday as high as $1.05 on Friday following the news.

The shares closed the week at $1.02.

Bisalloy (BIS) shares over the past 3 months.
Bisalloy (BIS) shares over the past 3 months.

Rheinmetall beat BAE Sytems AUstralia for the tender, in a decision-making process that took close to a year and included exhaustive blast survivability testing.

“Our first priority is to ensure our capability that it needs,” Defence Minister Marise Payne said.

“Choosing the right vehicle has been a very detailed process focused on the capability requirements of our Army. I’d like to commend defence and industry, who participated in this global tender process.

“Billions of dollars will be invested in this new capability and hundreds of jobs will be created. There will be many opportunities for small and medium enterprises around Australia to participate in the supply chain.”

The tanks will be built at a new Military Vehicle Centre of Excellence in Queensland.

Several ASX players have seen the benefits of increased defence spending by the federal  government.

The Boxer will be delivered in various configurations including ambulance, command & control, joint fires, surveillance, and repair and recovery — with its modular design allowing role changes if required.

Bisalloy has a long history with the Australian Defence Force – providing specialist products for its Armoured Personnel Carriers, Light Armoured Vehicles, Collins Class submarines and the Bushmaster Infantry Mobility vehicles.

This week’s deal comes after the company was appointed to provide armour for the new 4X4 military vehicles in September.