Australian steel is tipped to play a key role in the country's fledgling defence exports industry, with a deal being signed in the Illawarra region of NSW.
German defence technology firm Rheinmetall will team up with Bluescope Steel, which operates the Port Kembla steel works, to create a new military vehicle.
The armoured vehicles will be developed at a new "centre of excellence" west of Brisbane and if successful, will be sourced from 100 per cent Australian steel.
The first shipping of 15 tonnes of steel is bound for Germany for testing.
Rheinmetall director of strategy Tim Pickford said if successful, Bluescope would be the only supplier in the Southern Hemisphere to meet the "stringent" standards.
"There are only two companies in the world that we go to for high-hardness armour," Mr Pickford said.
"We've continued to be nothing but impressed with the capability here in the Illawarra region, it's a world beater.
"One of the problems is that because manufacturing's kind of a dirty word at the moment, we don't believe in ourselves, but I think the Australian steel team will put this place back on the map."
Plans for a global military vehicle export hub
Mr Pickford said the plan was to supply the vehicles to the Australian Defence Force and for export.
"Europe is big for us, but let's not forget South East Asia and what's going on down here, and the requirement for renewal of military capabilities for this region," he said.
"What we see Australia representing is a hub for export to not only this region but globally as well."
The Port Kembla steel works has seen a significant turnaround since it was facing potential closure in 2015, and the new deal was being hailed as a long-term boost.
Bluescope Steel spokesman Troy Gent said it would help shore up local manufacturing jobs.
"We've been on a long road to make ourselves cost competitive," Mr Gent said.
"We've taken huge costs out of the mill, and doing what we've done over the last three or four years has enabled us to compete in a space like this."
Technology could have spin-offs: analyst
It came as the Federal Government embarks on an ambitious plan to make Australia among the top 10 defence exporters in the world.
Commodities analyst Peter Strachan said while he did not agree with the Government's defence exports plan, the use of Australian steel in defence technology would bring wide-ranging benefits.
"It's an area where there could be spinoffs in the technology to use the technology that's developed for military hardware to actually do things that might be a little bit more sustainable," Mr Strachan said.
"We used to have a proper steel industry in Australia from go and woe, but at the moment it's more to do with specialty steel.
"It's a shame that we have to be involved in military hardware, I'd rather be using our technology to build wind turbines or something that's going to be sustainable long-term."