The Department of Defence has quietly axed a procurement process with Thales Australia that promised to scale up production at the company's Benalla munitions facility in north-east Victoria.

Under the deal, Thales was set to manufacture 155-millimetre M795 artillery ammunition.

At a National Press Club address last year , Minister for Defence Industry Pat Conroy said the Benalla factory would be the "first dedicated facility outside the United States to manufacture this artillery round".

Mr Conroy said it would produce 15,000 rounds a year by 2028, with the capacity to scale up to 100,000 rounds and support 550 jobs.

But in June this year, the Department of Defence issued a media release — omitting references to Thales or Benalla — saying it would "cease the current procurement acti

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