Brazilin President Dilma Rousseff says a new shipbuilding facility set up for submarine construction will manufacture its first conventional submarine in 2015 and the first nuclear submarine in 2025.
Brazilian company Ordebrecht is the lead local partner in the joint venture with French shipbuilder DCNS. The project is based at a Brazilian navy facility at Sepetiba Bay, south of Rio de Janeiro.
The government says the shipyard program calls for $3.95 billion in spending but independent industry analysts say that is unlikely to be the final cost of the project.
Brazil's plans for building a nuclear-powered submarine gained momentum with the discovery of vast quantities of oil and natural gas reserves under the seabed and on the outer limits of the country's territorial waters.
Brazilian military planners said rapid-response naval defenses were required to guard the country's oil wealth and conventional submarines won't be enough. Brazil plans to build up to four conventional submarines and a nuclear-powered submersible in the coming decades.
The huge capital-intensive project depends on Brazil continuing to have a steady growth and disposal income from exports of commodities, energy and manufactured goods.
Brazilian confidence in implementing the multibillion-dollar program has taken a few knocks this year with a slowing of growth and decrease in earnings from exports because of an over-valuation of national currency real.
However, Brazil's economy is still the world's fifth largest by nominal national earnings and the sixth largest by purchasing power parity. Officials say Brazil can afford the defense spending, countering skeptics who say the military outlay over the next decades may become an economic and social burden for Brazil's 200 million people.
Opening the shipyard, Rousseff said, "This facility allows our country to affirm itself on the world stage and, above all, develop in an independent sovereign way."
Brazil's neighbors Chile and Argentina have also announced increased military spending.
The shipyard will make metal hull structures for four conventional diesel-electric Scorpene class attack submarines and eventually a fifth submarine powered by a nuclear reactor.
Brazil says it will share French technology in the project but wants to develop the nuclear reactor with its own technology. Critics have questioned Brazil's choice of France as its partner, arguing better technologies exist elsewhere. Brazil's answer has been that it wants eventually to develop its own industry.
Brazil has campaigned for permanent membership of the U.N. Security Council, citing its regional prominence. Its entry into the nuclear club will give Brazil a status similar to that of the permanent five Security Council members -- the United States, Russia, France, Britain and China -- and India, another contender for permanent membership of the council.
Brazil launched its nuclear program in the 1950s and under military dictatorship was accused of seeking to make weapons of mass destruction. U.S. pressure forced the military to abandon the project.
Leading Brazilian defense manufacturer Embraer is competing with U.S. and European companies for market share. Last week Embraer won its first U.S. military contract for the sale of 20 Super Tucano light attack aircraft for use in Afghanistan, despite competing offers from rival U.S. manufacturers.