Adelaide has been chosen as the location of Australia’s new national space agency.

The federal government has set aside $41m for the new agency, which aims to boost commercial ties with the global aerospace industry worth billions.

The federal industry, science and technology minister, Karen Andrews, said the agency will also offer new employment opportunities to workers from other sectors.

“It will certainly have every opportunity to grow more jobs for our young people, but also for people who are potentially transitioning in from other industries,” Andrews told ABC radio on Wednesday. “We are well on target to triple the sector in the next 12 years.”

The South Australian premier, Steven Marshall, said his state was the ideal location for the agency alongside a rapidly growing defence sector.

“Establishing the headquarters of the Australian Space Agency in South Australia will launch our space and defence sectors to the next level,” he said.

Andrews said Adelaide was selected over strong applications from Queensland and New South Wales because SA was home to more than 60 organisations and 800 employees in space-related sectors.

“This decision builds on the very strong technology and defence presence in the state,” the minister said.

The federal government is also investing $260m to develop world-leading satellite capabilities and increase GPS accuracy in cities and regional areas.

The Australian Space Agency will be located at Lot Fourteen on the old Royal Adelaide hospital site by mid-2019, creating an immediate 20 jobs.

South Australia’s connection to the space industry dates back to just after the second world war with the Woomera rocket range established in the state’s north in 1947.