A shipbuilding unit of Singapore Technologies Engineering Ltd. has been awarded a roughly $746 million contract to build the first heavy icebreaker in more than 40 years for the U.S. Coast Guard.

The Defense Department contract award to Mississippi’s VT Halter Marine Inc., which could reach nearly $2 billion if all options are exercised, comes a day after the Coast Guard updated its Arctic strategic outlook.

“The Arctic’s role in geostrategic competition is growing, in large part, because it is no longer ‘self-secured’ by permanent sea ice,” the Coast Guard said in the outlook.

“Against the backdrop of great power competition, the polar security cutter is key to our nation’s presence in the polar regions,” Adm. Karl Schultz, the Coast Guard’s commandant, said in a statement.

Adm. Schultz said a new fleet of cutters are needed to “meet the unique mission demands that have emerged from increased commerce, tourism, research, and international activities in the Arctic and Antarctic.”