Australia's naval submarines to be built with local steel

Australia's next generation of naval submarines will be built using local steel in order to boost the economy, the government announced on Friday.

Innovation Minister Christopher Pyne said Australia's steel industry was suffering greatly, but the contract to build the naval submarines is likely to include a clause to use local steel, something which could keep the ailing sector alive.

"Because of the government's commitment to the 12 subs, the nine frigates, the patrol vessels and so on, there will be a whole body of work coming through the pipeline," Pyne told the Nine Network on Monday.

The government is currently negotiating with companies from Japan, Germany and France to determine who will win the contract.

One of the conditions is that the winning company must use local, Australian shipbuilders.

Pyne's comments follow the announcement that Arrium Steel, which employs 7,000 Australian workers, would be placed into voluntary administration.

Pyne said the government had held talks with administrators about throwing Arrium a lifeline by way of the submarine contract.

Opposition Leader Bill Shorten praised the government's quick thinking, and said he makes "no apologies" for his view that major works, such as on the submarines, should stay local.

"If there is a way in which governments can help the steel industry stay on its feet, through helping them with technology transfer so that we help upgrade our industry, we should," Shorten told Sky News later on Friday.

"I make no apologies for being nationalistic in my vision for Australia's economic future."