Concerns have been raised by a Wollongong councillor about Port Kembla being a potential military target if it ends up being the site of a nuclear submarine base.
The ABC has confirmed through Australia's Department of Defence, government, and industry sources that Port Kembla, south of Wollongong's CBD, is the strongly favoured option.
However, sites at Newcastle and Moreton Bay, east of Brisbane, are also shortlisted.
Wollongong councillor Cath Blakey said her community is alarmed by the prospect of a nuclear submarine base being built on its doorstep.
"It's causing alarm that it could make us a potential military target," Ms Blakey said.
"We want to see the focus on peacekeeping and public infrastructure, not nuclear proliferation.
"I think it's a potential sovereign risk to Australia to be hitching ourselves to the US and the UK."
Wollongong Lord Mayor Gordon Bradbury said he has some reservations, but not about being a military target.
"It's injection into the local economy would be substantial, and in that way there would be a net benefit, but there are lots of concerns in the community and I have to take that into consideration," he said.
"Hopefully some of those concerns would be taken into account over time."
Former submariner and South Australian Senator Rex Patrick said the secrecy around the government's nuclear submarine plans are also problematic.
"We don't want a situation where any jurisdiction has a base imposed on them without there having been a discussion," he said.
"There's a whole range of issues, like how are these submarines going to be regulated? How are we going to deal with nuclear stewardship and safety? How are we going to deal with spent nuclear waste and things like decommissioning?
"All those things are relevant to the debate, relevant to this acquisition, but there's not a peep being said about that and that's hugely problematic."
NSW ports in the dark about plans
The NSW Ports boss Marika Calfas said she has been kept in the dark by Defence about whether they will build a nuclear submarine base at Port Kembla.
"We're not privy to Defence's actions regarding their review at all," Ms Calfas said.
"We don't have any details on what Defence needs and we don't have any details on where they want to put it."
Port Kembla is one of three sites being considered by the Commonwealth government, however scoping work on Port Kembla's outer harbour has been carried out by officials in recent months.
Prime Minister Anthony Albanese is expected to announce details about the acquisition plan for Australia's nuclear submarines from the US tomorrow.
No space for both
Ms Calfas also said Port Kembla would not be able to accommodate both a nuclear submarine base and continue its current commercial activity.
"There isn't space to fit both the commercial port needs and the Navy in the same location," she said.
Mr Calfas also warned of problems that could be created by exclusion zones which would accompany a Defence base, and said projects like the wind farm assembly facility would be unable to proceed.
She said NSW Ports would continue to urge Defence to find a location that would not impact on port operations.
A decision about the final location is expected later in the year.
