BAE Systems PLC (LON:BA) has lost out to Rheinmetall on a A$3.15bn order for armoured reconnaissance vehicles.
The Australian defence ministry said it would enter exclusive final negotiations with Rheinmetall for the provision of 211 Boxer multi-role armoured vehicles.
The vehicles will be built by workers in Australia using Australian steel. The project should create up to 1,450 jobs, the defence ministry said.
Shares in BAE were down 0.65 at 577.6p in a rising market.