After several months of radio silence, high-speed welding technology developer K-TIG (ASX: KTG) returned to the market to announce a newly-signed memorandum of understanding (MoU) with Axiom Precision Manufacturing and Bisalloy Steel (ASX: BIS) to jointly develop a “sovereign capability” for the Australian defence industry.
Despite stating several aspects of the deal remain confidential and would be the subject of future communications, K-TIG did reveal several caveats underpinning the agreement, which its chairman Stuart Carmichael described as the company’s “expansion into the defence market” and a priceless opportunity to partner with two established defence contractors.
Axiom Precision Manufacturing is a defence and aerospace industry supplier that manufacturers components for Australia’s Collins Class submarines and is currently the sole provider to BAE Systems of vertical tail components for the F-35 Strike Fighter.
Meanwhile, Bisalloy Steel is Australia’s only manufacturer of high-tensile, abrasion-resistant quenched and tempered steel plate used for armour, structural and wear-resistant steel applications.
According to K-TIG, Bisalloy Steel is internationally recognised and certified by major defence departments and is being widely used by major international prime contractors for land and sea projects.
From K-TIG’s perspective, the prime objective of the MoU is to integrate its keyhole TIG technology, developed in tandem with the Australian Government’s Commonwealth Science & Industrial Research Organisation (CSIRO).
According to its developers, K-TIG’s method “makes welders exponentially more efficient”, generating eight times the penetration and an 100-fold improvement in speed compared to conventional GTAW welding, “allowing it to perform outstanding quality welds in both pipe and plate materials up to 5/8 inch (16mm) thick in a single pass”.
“This technology has been adopted by some of the world’s most productive fabricators, has been exported to more than 20 countries and is being used extensively in the vessel, tank, tube and pipe, oil and gas, nuclear, water treatment, defence and other industries,” K-TIG said.
Developing an arsenal
The non-binding agreement means K-TIG will be involved in developing a proprietary method of manufacturing various parts for the Australian military in a bid to improve Australia’s competitive advantage on the world stage.
According to the company, development of an Australian sovereign capability in the welding of specialist defence steels will allow the nation’s industrial companies to maximise their participation in upcoming defence procurements.
This includes the four-phase $10-$15 billion LAND 400 project, which will see the Australian Defence Force’s existing Australian light armoured vehicle and M113 armoured personnel carrier fleets replaced with new vehicles that deliver improved levels of firepower, protection and mobility.
It has been revealed that the welding capability will be based around the keyhole TIG processes developed and commercialised by K-TIG.
Axiom will be responsible for establishing an Australian sovereign capability to weld specialist defence steels that can be utilised in a variety of land, sea and air defence projects.
Bisalloy has been tasked with supplying specialist steels to the project based upon their proprietary armour plate technology.
Today’s news pushed K-TIG shares up by almost 42% up to $0.22 in morning trade. Bisalloy Steel shares were also higher, up by 1.6% to $0.945.