10/12/2020 - 12:00

NAIF to become equity investor

10/12/2020 - 12:00

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The Australian government will become a shareholder in mining and infrastructure projects across northern Australia after widening the mandate of a $5 billion investment fund.

NAIF to become equity investor
Strandline Resources will get $150 million in NAIF funding for its Coburn mineral sands project in WA.

The Australian government will become a shareholder in mining and infrastructure projects across northern Australia after widening the mandate of a $5 billion investment fund.

The Northern Australia Infrastructure Facility (NAIF) has already approved $2.4 billion of financial support to 23 projects, in the form of senior or subordinated debt.

However, only about half the projects have reached financial close, meaning the fund has battled to disburse all the money allocated to it.

WA projects earmarked to get financial support include Strandline Resources’ Coburn project ($150 million), Sheffield Resources’ Thunderbird project ($95 million) and Kalium Lakes’ Beyondie potash project ($74 million).

In each case, the NAIF plans to bankroll infrastructure such as roads, ports and airstrips that are an integral part of these projects.

NAIF has also committed $90 million to Alinta Energy's Chichester solar gas project, which will help to power Fortescue Metals Group’s mining operations.

Pilbara Minerals and the Onslow Marine Support Base have already received financial support.

Minister for Resources, Water and Northern Australia Keith Pitt said today NAIF would be able to make equity investments worth up to $500 million in aggregate.

“The changes will speed up the flow of funds to approved projects, give projects a greater range of debt support options, and allow NAIF to make equity investments,” Mr Pitt said.

“The reforms will streamline the approval process for NAIF to decide the most appropriate financing option for each project, including debt guarantees and the purchase of bonds, without the need for each decision to seek multiple approvals.

“They also remove an existing ban on equity investments, allowing NAIF to take a non-controlling equity investment in a project.

“These new measures, together with reforms announced in the Budget, will transform the NAIF into a more proactive investor for the benefit of northern Australia.”

Under changes announced in the year’s budget, NAIF is able to collaborate with lending institutions to support smaller projects, worth between $1 million and $10 million.

In addition, the definition of public benefit has been simplified and expanded to include factors such as jobs, regional income, and opportunities for local suppliers, including Indigenous suppliers.

Legislation to implement these changes will be introduced into Parliament early next year.

This follows changes adopted in 2018, such as eliminating a $50 million project threshold and removing a 50 per cent cap on the debt taken on by the facility.

A Senate committee's interim report into the government's Northern Australia agenda recommended equity stakes and guarantees for small-scale and Indigenous projects.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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