MELBOURNE –Japan and Australia have formally signed a contract to co-develop a new class of warships for the Australian navy, based on an upgraded version of Japan's Mogami-class frigate, officials confirmed Saturday.

The agreement was finalized during a meeting between Japanese Defense Minister Shinjiro Koizumi and Australian Deputy Prime Minister and Defense Minister Richard Marles in Melbourne, according to Kyodo News.

Under the deal, Canberra will invest up to AU$20 billion ($14.4 billion) over the next decade to develop and acquire a fleet of 11 next-generation frigates.

Koizumi told reporters after the meeting that he hopes to elevate Japan's defense partnership with Australia to "new heights," describing the deal as a milestone in bilateral security cooperation.

The first three vessels will be constructed in Japan and are scheduled for delivery to Australia by 2029. The remaining eight are expected to be built in Australia under technology transfer arrangements, though final assembly locations are still under discussion.

The contract was signed by the Australian government and a consortium of Japanese defense firms, including Mitsubishi Heavy Industries Ltd., the primary manufacturer of the Mogami-class vessels currently in service with the Japan Maritime Self-Defense Force.

While Japan's domestic laws on defense equipment transfers typically restrict the export of lethal weapons, the regulations make an exception for joint development and production projects. Tokyo is expected to revise its defense equipment transfer guidelines next week, moving toward permitting arms exports in principle.

Australia selected the Japanese frigate design last August as the preferred option for its naval modernization program, known as Project SEA 3000, beating out proposals from German and South Korean shipbuilders.

Japan views Australia as a "quasi-ally" and a cornerstone of regional stability in the Indo-Pacific. The two nations have been steadily deepening defense ties through joint military exercises, intelligence sharing, and technology cooperation.

The frigate deal follows other major collaborative efforts, including Japan's joint development of a next-generation fighter jet with the United Kingdom and Italy.

Koizumi and Marles previously met in Tokyo on April 8 to lay the groundwork for Saturday's announcement. Both ministers declined to take questions following the Melbourne meeting, but a joint communiqué is expected to be released in the coming days.