Thales Australia, which produces munitions in both places, inked a deal with US firm General Dynamics Ordnance and Tactical Systems at the Land Forces defence industry expo in Adelaide.

Defence Minister Christopher Pyne witnessed the ratification and stressed its export potential.

“This agreement will make Thales Australia a part of the GD-OTS’s international supply chain, which could facilitate additional exports into the US from Australia across a range of munitions, supporting the Australian Government’s goal of becoming a Top 10 global defence exporter,” Senator Pyne said.

“Also covering medium calibre, mortar, tank and artillery ammunition, this agreement demonstrates a comprehensive, strategic approach to meeting the needs of the Australian Defence Force and could progress to include manufacturing the bombs for our region’s Joint Strike Fighters.”

Those types of ammunition are not being made at Benalla or Mulwala, a Thales spokesman said.

GD-OTS president Firat Gizen said the pact would add to existing agreements with Australia’s defence force.

“Expansion of our pre-existing partnership and the inclusion of Thales Australia into our global Supply Chain will provide significant capability benefits to the ADF while offering unrivalled opportunity in the Sovereign Industry Capability area,” Mr Gizen said.

Sovereign Industry Capability is the term used by the Defence Deparment in relation to its requirement for Australian control for certain army, navy and air force projects.

Senator Pyne said the Thales-GD-OTS hook-up boosted the “identified Sovereign Industrial Capability in munitions and small arms research, design, development and manufacture”.

Thales chief executive Chris Jenkins said he was proud of the collaboration.

“Thales is delighted to be associated with GD-OTS, and to continue offering and delivering world-class capability to the Australian forces,” Mr Jenkins said.

It is unclear when production of the new ammunition will begin at the plants which employ more than 600.