Australian munition plants operated by Thales Australia will continue operations for the country's military under a five-year plan announced this week.

Defense Minister David Johnston said the decision on the facilities in Mulwala, New South Wales, and Benalla, Victoria, allow finalization of negotiations on a munitions program worth more than $320 million.

"This is great news for the Mulwala workers and their colleagues down the road at Benalla," he said. "Entering into the new interim arrangements for continuing operations at Benalla and Mulwala means the facilities will be able to retain about 550 direct manufacturing jobs in regional Victoria and New South Wales.

"Maintaining a skilled and competent workforce has been a constant challenge for munitions manufacturing in Australia due to the relatively small munitions demand spread across a number of munitions types."

Propellant and high explosives are manufactured by Thales at Mulwala. The Benalla facility produces small arms ammunition such as 5.56mm, 7.62mm and 12.7mm (.50 caliber), and 20mm ammunition.

Benalla is being eyed for production as well of 81mm mortar rounds.