Strategic Sovereign Industry Zones: where, why and how
Since February 2025 Australian governments have committed about $7 billion to keep individual industrial plants alive in four regional centres. Whyalla’s steelworks received a joint state and federal package of $1.9 billion. Glencore’s Townsville copper refinery and Mount Isa smelter received up to $600 million. Rio Tinto’s Boyne smelter at Gladstone received $2 billion over ten years, and in August the Tomago smelter near Newcastle, Australia’s largest, received $2.5 billion.
Over the same period Australia lost its only manganese alloy smelter, at Bell Bay near Launceston, when administrators closed it in July with the loss of more than 200 jobs. In April a fire cut output at Viva Energy’s Geelong refinery, one of only two refineries left in the country.
Each of those rescues may well have been justified. But each was negotiated on its own, under deadline pressure, with no common test of what the nation was buying. Every one of those centres is on the list of Strategic Sovereign Industry Zones I have proposed in my articles, my submission to the Parliamentary Joint Committee on Defence and my briefing to RUSI NSW. This post sets out what a zone is, how the sites should be chosen and how a zone would work in practice.
What a zone is
A Strategic Sovereign Industry Zone is a designated regional precinct where government deliberately concentrates the support needed to produce goods the nation cannot afford to run out of. Each zone would offer the same package:
enabling infrastructure: port, rail, road, water and energy connections built ahead of demand
tax settings such as accelerated depreciation and investment allowances, tied to capability outcomes
greenfield workplace arrangements for new facilities
fast-tracked approvals with fixed timeframes, while keeping environmental and safety standards
training partnerships with TAFE and universities, started before the first plant opens
A zone is not a tax haven and it is not a subsidy for any business that happens to move in. Its purpose is narrow: to anchor domestic production of the critical goods a national audit identifies, from fuel, water treatment chemicals and pharmaceutical precursors to munitions, critical minerals processing and the metals that defence manufacturing depends on.
We already have the machinery
Australia does not need to invent zones from scratch. The states already run versions of them:
New South Wales has Special Activation Precincts. The Williamtown precinct, declared in 2020, covers up to 10,000 hectares around RAAF Base Williamtown and Newcastle Airport and is focused on defence and aerospace manufacturing.
Queensland has State Development Areas. The Gladstone State Development Area was declared in 1993, covers almost 27,000 hectares, and the Coordinator-General assesses and decides every application within it.
Western Australia is planning the Western Trade Coast around Kwinana, Rockingham and Henderson, alongside the Commonwealth’s new Henderson Defence Precinct.
What these models lack is a national purpose. Each was designed to grow a regional economy, and none is tied to a national assessment of which goods Australia must be able to make for itself. The Commonwealth brings the missing pieces: co-investment through a Sovereign Industry Fund, long-term procurement contracts and a single test for every dollar spent.
How the sites should be chosen
The centres I have named, Newcastle, Townsville, Whyalla, Geelong, Gladstone, Rockingham and Launceston, are indicative. The final list should come from the audit, working with the states, and every candidate should be measured against the same six criteria, published before any site is chosen:
A deep-water port able to import inputs and export product.
Rail and road freight links to suppliers, customers and Defence bases.
Reliable, competitively priced energy, the factor behind most of these rescues.
An existing industrial base with anchor firms that new suppliers can cluster around.
A skilled workforce and training institutions that can grow it.
Strategic fit: proximity to Defence bases and the capacity to produce goods the audit finds critical.
Geography matters too. Spreading zones around the continent avoids concentrating critical production where a single cyclone, cyber attack or blockade could stop it.
Seven candidate centres
Newcastle and the Hunter. Home to one of the world’s largest coal export ports, Australia’s largest aluminium smelter at Tomago and RAAF Base Williamtown, the base for the RAAF’s F-35A fleet. The Williamtown precinct gives the region a ready-made planning framework for defence and aerospace manufacturing.
Townsville. The largest general freight and container port in northern Australia, Lavarack Barracks and RAAF Base Townsville, Sun Metals’ zinc refinery and Glencore’s copper refinery. In May, local leaders and the United States consul general backed a proposal for Sun Metals, owned by Korea Zinc, to expand into copper, lead and other critical minerals. Townsville is the natural home for northern critical minerals processing.
Whyalla. As ASPI has pointed out, the steelworks is Australia’s only domestic source of long steel products such as structural steel and rail, with its own port and iron ore. The steelworks is in administration, two bidders remain and the sale is due to finish by the end of 2026. Whatever the outcome, the nation needs a domestic supply of steel, and Whyalla’s future should be planned rather than rescued.
Geelong. Hanwha’s $170 million Armoured Vehicle Centre of Excellence at Avalon is building AS9 Huntsman howitzers, with a second line for Redback infantry fighting vehicles, and the Viva Energy refinery is one of the two remaining in Australia. Geelong already combines defence manufacturing and fuel security in one region.
Gladstone. Queensland’s industrial heavyweight: the Boyne smelter, Rio Tinto’s alumina refinery, Orica’s chemical complex, three LNG plants and a 27,000-hectare State Development Area with a single decision-maker. Few places in Australia are better placed to host chemical and metals production at scale.
Rockingham. The centre of Western Australia’s naval enterprise. HMAS Stirling and the Henderson Defence Precinct will support Submarine Rotational Force-West from 2027, build the Navy’s new general purpose frigates and later maintain Australia’s nuclear-powered submarines, with more than 10,000 jobs expected across the two sites. The Kwinana industrial strip next door adds chemicals, minerals processing and a fuel import terminal.
Launceston and Bell Bay. A deep-water port on the Tamar, hydro power and the Bell Bay aluminium smelter, whose power contract expires in December. The closure of the manganese smelter in July shows what happens without a plan: Australia now has no domestic source of an alloy that steelmaking cannot do without.
How a zone would work
The governance should follow the model I proposed to the Parliamentary committee:
Designation: zones designated jointly by the Commonwealth and the relevant state through National Cabinet, against the published criteria.
Administration: a single state authority for each zone, on the Coordinator-General or Special Activation Precinct model, giving investors one point of contact and one set of approval timeframes.
Funding: co-investment from the Sovereign Industry Fund for projects that close a critical gap, with private capital alongside it.
Demand: long-term procurement and offtake contracts from Defence and other agencies, so a plant has guaranteed customers before it is built. As a procurement professional, I regard this as the most powerful lever of all.
Accountability: a Department of Sovereign Industry reporting publicly each year on investment, jobs and, most importantly, the additional days of supply each zone has added for the critical goods it was created to produce.
Lessons from overseas
South Korea chose Changwon in 1974 as the hub of its heavy and chemical industrialisation drive, and built the country’s first planned city around it. Fifty years later it hosts 16 of Korea’s 83 nationally designated defence companies and more than 2,500 defence-related firms, and its home province accounts for most of Korea’s defence exports. Hanwha, now building howitzers in Geelong, is one of them. Changwon also shows the work does not finish: it now faces skills shortages, an ageing population and infrastructure that needs renewal. Zones need sustained attention, decade after decade.
The United Kingdom’s freeports and investment zones offer a caution. The Institute for Fiscal Studies has warned that much of the activity such zones attract may simply move from elsewhere in the country, or would have happened anyway, and that their true costs and benefits will never be definitively measured. Australia should design for that risk from the start: support should be tied to new capacity in critical goods, and progress should be measured in output and days of supply, rather than in the number of businesses that relocate.
Guarding against pork-barrelling
Zones only work if they are chosen on strategic merit. If site selection becomes a matter of electoral convenience, the program will lose the confidence of industry and the public very quickly. Three safeguards would help:
publish the selection criteria before any site is announced
have the audit’s independent steering committee assess every candidate against them
apply one test to every funding decision: does it reduce a vulnerability the audit has found to be critical? If it does, prioritise it. If it does not, it should compete on ordinary commercial terms.
From rescue to plan
The rescues of the past eighteen months show that governments already accept these places matter to the nation. What is missing is a plan that decides in advance where Australia will make the goods it cannot do without, and invests on purpose rather than in a crisis. That is what Strategic Sovereign Industry Zones are for, and it is why the national audit has to come first.
This post builds on my articles “A national audit for a stronger Australia” (Defence Connect, June 2026) and “First find Australia’s economic vulnerabilities, then vigorously fix them” (The Strategist, ASPI, July 2026), my submission to the Parliamentary Joint Committee on Defence and my RUSI NSW briefing. See also What I told Parliament and From audit to action.
Sources: ASPI The Strategist, David Uren, “The strategic importance of the Whyalla steelworks” (20 February 2025); Reuters via Mining Weekly, “Australia’s Whyalla Steelworks to cut hundreds of jobs ahead of sale” (14 September 2026); Glencore, “Agreement reached on Mount Isa Copper Smelter and Townsville Copper Refinery” (8 October 2025); Rio Tinto, Queensland and Commonwealth governments, Boyne smelter agreement (24 March 2026); Australian Associated Press, Tomago smelter package (13 August 2026); Australian Associated Press, Liberty Bell Bay closure (16 July 2026); The Examiner, Bell Bay Aluminium power contract (5 August 2026); Geelong Independent, Geelong refinery (26 August 2026); NSW Government, Williamtown Special Activation Precinct (2020); Queensland Coordinator-General, Gladstone State Development Area; Department of Defence, Henderson Defence Precinct; Hanwha Defence Australia, Armoured Vehicle Centre of Excellence (2024); The Korea Herald, Korea Zinc and Townsville (27 May 2026); East Asia Forum, “South Korea’s military manufacturing hub needs revitalisation” (13 November 2024); Institute for Fiscal Studies, “Freeports and Investment Zones” (2023).
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