It’s not a phrase you will often hear — lender of first resort. But with a unique mandate and a portfolio of projects, the Australian Government’s Northern Australia Infrastructure Facility (NAIF) has become the key financing agency in the region for project enabling infrastructure.
Readers will be aware that northern Australia has a long history with resources. Many of the north’s regional cities and towns only exist thanks to mining; such as Mount Isa, Newman, and Port Hedland. Plus NAIF’s support for resources (A$2B in investment decisions to infrastructure) reflects the importance of the sector to the region’s economy.
Our mission is to be an innovative financing partner in the economic growth of northern Australia — or half the Australian land mass — giving the market confidence that the Australian government is willing to support the development of its project and sector.
In overall terms, NAIF’s portfolio stands at approximately 30 projects, supported by nearly A$4B in investment approvals to projects ranging from large-scale resources and energy developments to social infrastructure, airport upgrades, agriculture, and aquaculture.
However, NAIF is not just a financier. Indeed, we are a solutions provider bringing together a depth of financial expertise across a range of investment sectors, including energy and resources.
Working with proponents during project development phases, NAIF provides expertise to help optimize capital structures. It regularly leads the technical due diligence on behalf of lender groups and has also provided debt to crowd-in other financiers. Where proponents have not ultimately needed finance from NAIF, we have regarded this as a win, because the project has gone ahead and its economic benefits achieved.
In resources, and critical minerals projects in particular, these strategies are helpful as proponents often face the significant gap between the vast opportunities in the ground below them and the stark realities of the boardroom in front of them: primarily, that funding mine developments and infrastructure — including the complexities of mineral processing — sits outside the risk appetite of commercial banks.
The opaque and often immature nature of critical minerals markets means that banks are unable to manage risk through hedging products as they do for traditional commodities. NAIF’s role in validating and de-risking projects in the eyes of potential investors including banks and other financiers is an important step in attracting new pools of capital.
With critical minerals in particular, NAIF works closely with other government investment agencies to ensure positive outcomes for projects in the north. There have been a number of projects where NAIF and Export Finance Australia have financed projects together. We are the “patient capital” which gives confidence to commercial lenders and flexibility to proponents and financiers in this vital sector.
Looking ahead, NAIF is ready and able to further support the critical minerals sector. This year we were allocated an additional A$2B by the Australian government, taking total NAIF financing available for infrastructure projects to A$7B. As part of the Australian Government’s Critical Minerals Strategy is also a further minimum A$500M on top of the A$655M already committed to critical minerals and rare earths projects.
Within NAIF’s pipeline, estimated at over A$4B, are another four critical minerals projects worth A$400M in NAIF investment. Additionally, a further five projects worth over A$900M are actively investigated by NAIF, potentially supporting thousands of jobs, and giving the region even more of an economic boost.
Altogether, these projects (four in Western Australia, three in Queensland, and two in the Northern Territory) would help meet the huge global demand for critical minerals, expanding the sector in northern Australia and developing sovereign capability to build reliable, competitive, and diverse supply chains for Australia and its key international partners.
These are exceptional opportunities for Australia and help create the setting for more advanced processing and manufacturing to happen onshore, particularly for elements of the supply chain where we can be competitive internationally.
They also deliver major job benefits for communities, particularly the Indigenous community, with all proponents required to develop Indigenous engagement strategies. So far, more than 920 jobs have been created for Indigenous people on NAIF-funded projects, supporting more than 170 local businesses.
NAIF’s catalytic funding model, effectively as the lender of first resort, has sparked a step-change not only in the development and financing of critical projects, but also in the delivery of enabling infrastructure, which not only turns these big projects into reality, but also delivers greater benefits to nearby communities.
One example of our support for enabling infrastructure was part of NAIF’s loan to the A$6B Perdaman urea project in Western Australia, under which we also loaned A$160M to the Pilbara Ports Authority for a new multi-user wharf and facilities at the Port of Dampier, and A$95M to the Western Australia Water Corporation for the expansion of the Burrup seawater supply and brine disposal scheme.
Northern Australia is a region of tremendous opportunity. NAIF is here to help fulfil that potential.
