Analysis of Performance Criteria
NAIF Loan Investment Decision
Total Project Size
Pumped storage hydro
Aust Aboriginal Mining Corp (AAMC)
Northwest of Newman, WA
Iron ore project
Beef processing facility with onsite accommodation
North of Weipa, QLD
New floating terminal
Community, training and high performance centre
NT Government (shiplift)
Shiplift and associated marine industry infrastructure
James Cook University (JCU)
Car park as part of hospital redevelopment
South of Newman, WA
Sulphate of potash project
Charles Darwin University (CDU)
CBD city campus
South of Denham, WA
Heavy mineral sands project
 NAIF’s Board made an Investment Decision for up to $25m, however subsequent facility agreement is for an amount of $24m
 This includes an Investment Decision to offer Kalium Lakes project an $10.5m contingency facility to ensure that the project would have the best chance of progressing if their proposed equity raising was not fully subscribed. Due to a successful equity fund raising, this facility was not ultimately needed by Kalium Lakes and therefore it is not included in the NAIF commitments $ amount.
1. & 2. Public Benefit and Indigenous Engagement
The Mandatory Criteria to be eligible for NAIF financial assistance under the Investment Mandate requires that the Board must be satisfied that the proposed Project:
- will be of public benefit and will produce benefits to the broader economy and community beyond those able to be captured by the Project Proponent; and
- has an Indigenous Engagement Strategy (IES) which must set out objectives for Indigenous participation, procurement and employment that reflect the Indigenous population in the region of the proposed Project.
Public benefit was assessed in line with NAIF’s Public Benefit Guideline which clearly outlines the requirements of the NAIF Board. The potential benefits vary for each Project and have been assessed spanning different periods depending on the life of the asset. Benefits and costs to the Proponent and ‘Outside of the Proponent’ are assessed quantitatively where possible to come to a net public benefit number. Where it is not possible to value costs and benefits in monetary terms, they are considered qualitatively. Construction jobs and operational jobs are also forecast.
The eleven FY19-20 Investment Decisions totaling $1.4 billion are forecast to generate $4 billion of public benefit to the northern Australia economy which is a multiplier of 2.9 for every NAIF loan dollar committed. The projects funded by NAIF are forecast to support 3,530 jobs in either the construction or operational phase which will contribute to economic and population growth in the regions of those projects.
Each of the FY19-20 Investment Decision Project Proponents developed and adopted an IES to be implemented over the life of the Project. NAIF assesses each IES on a case by case basis. Refer to the NAIF Indigenous Engagement Strategy Guideline on NAIF’s website. Monitoring and Reporting requirements are agreed with each Proponent in the NAIF loan facility documentation. These include mechanisms to understand and address issues arising during the implementation of the IES and to provide for accountability where there is not a demonstration of genuine effort to pursue an approved IES.
More specific details on the public benefit assessed and IES commitments for each project can be found in the case studies for each project on NAIF’s website and on the dedicated economic impact and Indigenous Engagement pages in this report.
3. Investments in Infrastructure Projects in Northern Australia
In making the eleven FY19-20 Investment Decisions, NAIF met its target of between 7-12 transactions. This is an increase of 83% on the six decisions made last financial year. The projects supported reflect the breadth of NAIF’s role in developing northern Australia. Those Investment Decisions comprised offers of finance for Projects in each of the three northern Australia jurisdictions They were also diversified across sectors, namely energy (Genex), resources (AAMC, Metro Mining, Kalium Lakes and Strandline), transport (Darwin Shiplift), social infrastructure (NQ Cowboys, JCU, Mater Health and CDU) and agriculture & water (Signature Onfarm).
NAIF committed new investment finance of $1.4 billion through the FY19-20 Investment Decisions for projects against a target of $1 billion - $2 billion, this is an increase of 289% on last financial year. The total capital value of those projects supported was $2 billion against a target range of $1.25 billion to $3 billion, and a 44% increase on last financial year.
4. Effective Risk Management
Compliance with NAIF’s Risk Appetite Statement (RAS) for the eleven FY19-20 Investment Decisions has been independently audited by NAIF’s internal auditor McGrathNicol. The internal audit confirmed compliance with NAIF’s RAS for the Investment Decisions made during the reporting period.
NAIF’s RAS provides a clear articulation of the target level of risk in executing the NAIF’s strategic objectives. It guides risk appetite, identifies tolerance measures (including for making NAIF Investment Decisions) and has been developed in consultation with the responsible Minister and the relevant northern Australia jurisdictions. The RAS also addresses other operational matters including governance and operations.
Under Section 12(4) of the Investment Mandate NAIF may have a higher risk appetite in relation to factors that are germane to investing in northern Australia infrastructure, including, but not limited to, northern Australia’s distance, remoteness and climate.
In line with best practice, NAIF adopts a continuous improvement approach and regularly reviews its risk management framework and policies by considering emerging trends and risks, changes to existing risks and any changes to NAIF’s Investment Mandate and Government Policy. In the period, this included a detailed review of the Board’s RAS to ensure it remained appropriate.
5. Encourage Private Sector Contribution to Financing Projects
Of the eleven FY19-20 Investment Decisions, eight or 73% have private sector financiers also providing finance for the project in addition to NAIF’s loan. This meets NAIF’s target of greater than 50 percent of projects supported with private sector finance.
6. Raise Awareness of NAIF Value through Dissemination of Information to Industry Stakeholders
This year NAIF refreshed its approach to stakeholder relations and communications, with a new dedicated stakeholder relations and communications function being established in 2020.
New strategies for stakeholder relations and communications were approved by the Board which place a focus on building and maintaining strong relationships with government, regional and industry stakeholders. Reflecting the new strategies and following a 12-month workplan, stakeholder activities in FY19-20 have largely focused on the following areas:
- Meetings and engagement relating to the potential extension of NAIF’s mandate beyond 2021;
- Activities to support the progression of deals and projects;
- Meetings and engagement with Members of Parliament, both at a state and federal level
- Regular consultation with Commonwealth departments and agencies and broader networks including the Regional Development Australia network, Development Commissions, and the northern Australian based universities; and
- Meetings with key industry stakeholders and organisations. Engagement was enhanced this year with several organisations and industry bodies. These included, however were not limited to, organisations such as IBA, ILSC, CEFC, ARENA, Infrastructure Australia, IAQ, QIC, Advance Cairns and the Red Meat Advisory Council.
Although in person stakeholder activities were limited in the last four months of the year due to COVID-19 restrictions, NAIF still engaged in significant stakeholder activity including:
- NAIF was a frequent contributor to targeted industry and sector-specific conferences and events during the year. These provided an opportunity to continue to build the understanding about NAIF’s role in the development of northern Australia;
- NAIF participated as a key note speaker, presenter, panel member or delegate in 18 events covering various sectors and interest areas relevant to NAIF’s mandate including infrastructure, engineering, construction, procurement, transport, energy, agriculture, tourism, water, mining and resources, regional growth, economic development and major projects;
- NAIF’s executive engage frequently with other lenders and equity financiers, project sponsors, advisers and participants through both pipeline development and due diligence assessment processes. Opportunities to explain the NAIF mandate and discuss with other financiers how NAIF may be able to work with other lenders and financiers have been pursued;
- Regional communities and their leaders are afforded opportunities to meet NAIF Board members and executives to discuss their strategic planning and infrastructure priorities. This year dedicated stakeholder functions were held alongside Board meetings in Broome and Mt Isa;
- The NAIF Board members and NAIF senior executives have continued to meet regularly with Western Australian, Northern Territory and Queensland government stakeholders to discuss upcoming projects and their priorities. Those associations have continued to strengthen including through making further Investment Decisions in each jurisdiction and progressing projects through the final assessment stages.
- NAIF has met with a range of Indigenous groups, businesses and agencies throughout the year to develop its understanding of our Indigenous stakeholders and the role of NAIF in broader Indigenous economic development opportunities in the north, including contributing to the Indigenous Reference Group discussions at the Northern Australia Ministerial Forum. A Memorandum of Understanding was agreed with Indigenous Business Australia and the Indigenous Land and Sea Corporation to explore opportunities for collaboration and therefore increase investment in Indigenous enterprise.
- NAIF has also engaged with a range of Traditional Owner groups, Prescribed Bodies Corporate, Native Title Representative Bodies, Indigenous businesses, and agencies (federally and across the jurisdictions) in relation to specific project IES prior to the Board making its Investment Decisions, notably the National Indigenous Australians Agency;
- NAIF this year issued or worked with proponents on 38 media releases about NAIF transactions. NAIF views the media as an important method of delivering transparent information about our investments on behalf of taxpayers, and to help inform and educate about our role in the development of northern Australia; and
- NAIF continues to grow its digital reach to provide increased and timely access to information about our activities, across the NAIF website, Twitter, and LinkedIn. The NAIF website recorded 28,689 unique viewers. NAIF’s LinkedIn audience grew more than 90 per cent this financial year (to more than 850 followers), reflecting the greater focus placed on leveraging this channel to promote news stories about NAIF.
7. Building Diverse Pipeline of Potential Infrastructure Projects
NAIF’s pipeline is reported at two different stages:
- Active Enquiry (where there has been early stage interaction between the Proponent and NAIF to determine whether a project maybe suitable for NAIF funding); and
- Due Diligence (where there has been comprehensive determination that a project has the potential to qualify for NAIF funding and in depth assessment begins prior to going to the NAIF Board for an Investment Decision).
Both the Active Enquiries and projects in Due Diligence are diverse in terms of both jurisdiction and industry sector. For example, Due Diligence projects are spread across NAIF’s jurisdictions as follows - WA: 61%, QLD: 21%, NT: 18%, and diversified across sectors as follows – Resources: 43%, Agriculture & Water: 21%, Energy: 18%,Transport: 14%, Social Infrastructure: 4%.
8. Achieve Sound Financial Performance
NAIF’s external auditor issued an unmodified audit opinion on NAIF’s FY19-20 Financial Statements.
NAIF has carefully managed expenses ensuring operating expenses were within NAIF’s appropriated budget including the use of retained surpluses from previous year’s budget underspend.
For each of the eleven FY19-20 Investment Decision commitments, contracted revenue for the NAIF financial assistance will include an establishment fee (payable at or around financial close) and an interest rate above the Commonwealth borrowing rate. Pricing of individual financing decisions takes into account NAIF’s target to cover the cost of borrowings and NAIF’s operating expenses at an Investment Decision portfolio level over the life of the NAIF loans supported by its Investment Decisions (both currently approved and projected).