National Reconstruction Fund (NRF)

Purpose and Program Overview

The National Reconstruction Fund (NRF) is a significant Australian Government initiative established to diversify and transform the nation’s industry and economy. Its primary intent is to boost the flow of finance into critical priority sectors. The NRF aims to secure Australia’s future prosperity and drive sustainable economic growth by supporting projects that leverage the country’s natural and competitive strengths.

The National Reconstruction Fund Corporation (NRFC), an independent financier, operates commercially to achieve a positive rate of return while making autonomous investment decisions. This $15 billion fund plays a crucial role in enabling strategic Australian-based initiatives across various high-value sectors, thereby strengthening industrial capabilities and fostering innovation.

Key Grant Details

• Grant Amount or Funding Range: Funding amounts vary based on the specific application and project scope. The NRFC provides debt finance, equity finance, and guarantees.
• Application Open and Close Dates: Applications are open at any time, indicating a continuous intake process.
• Eligible Industries or Business Types: Businesses with strong proposals primarily focused on Australian initiatives in the seven priority sectors.
• Required Co-contributions: The NRFC encourages co-investment and welcomes proposals that include credible co-financiers or investment partners.
• Location/State/Territory Applicability: The fund supports Australian-based initiatives applicable across all states and territories.

Priority Sectors

The NRFC prioritises investments in seven key sectors of the Australian economy:

• Renewables and low-emission technologies
• Medical science
• Transport
• Value-adding in agriculture, forestry and fisheries
• Value-adding in resources
• Defence capabilities
• Enabling capabilities

Of the NRF’s total $15 billion, $8 billion has been earmarked for specific areas:

• Up to $3 billion for renewables and low-emission technologies
• $1.5 billion for medical manufacturing
• $1 billion for value-adding in resources
• $1 billion for critical technologies
• $1 billion for advanced manufacturing
• $500 million for value-adding in agriculture, forestry, fisheries, food, and fibre.

Funding Scope

The NRF provides various forms of finance rather than traditional grants with fixed streams:

• Types of Finance: Debt finance, equity finance, and guarantees.
• Categories: Support is directed towards projects within the seven priority areas outlined. This includes activities such as innovative manufacturing, processing outputs into higher-value goods, and developing products for defence and advanced technologies.
• Project Timeline: Not explicitly stated, but investments are assessed based on their return potential over the medium to long term, indicating support for projects with varying timelines.

Eligibility Criteria

• Business Focus: Proposals must be primarily focused on Australian initiatives.
• Investment Type: Applicants can request debt finance, equity finance, or guarantees.
• Sector Alignment: Proposals must target one of the seven priority areas of the Australian economy.
• Prohibited Investments: Proposals must avoid investments in coal or natural gas extraction and native forest logging.
• Financial Viability: Applicants must demonstrate a positive return on investment or the ability to repay debt.
• Australian Industry Participation: A completed Australian Industry Participation Plan is required.
• Return on Investment: The NRFC aims for a target portfolio rate of return of 2–3% above the 5-year Australian Government Bond rate over the medium to long term. Higher risks and longer payback periods may be accepted for emerging technologies and strategic industries.
• Investment Readiness: Proposals that are investment-ready are welcomed.

Eligible Activities and Expenses

The NRFC focuses on investment in manufacturing opportunities and value-adding activities:

• Value-adding in Resources: Investment in innovative manufacturing, exploration and drilling technologies, safety solutions, and domestic processing and refining of minerals (e.g., for battery production).
• Value-adding in Agriculture, Forestry, and Fisheries: Funding for manufacturing products related to primary industries, processing outputs into higher-value goods (e.g., fertiliser, farm equipment, crop/animal health technologies, improved storage solutions, food/beverage processing). New farms or plantations are excluded.
• Transport: Production of vehicles and components for aircraft, roads, rails, and ships. This excludes common infrastructure but includes products used in such infrastructure (e.g., road surfacing materials).
• Medical Science: Manufacturing of medical products for therapeutic use, including devices, medicines, personal protective equipment, and vaccines.
• Renewables and Low Emission Technologies: Investment in manufacturing for renewable energy generation, transmission, distribution, storage, energy efficiency, and waste reduction (e.g., wind turbines, batteries, solar panels, and innovative waste reduction packaging). Installation of standalone renewable energy infrastructure is excluded.
• Defence Capability: Developing and manufacturing products essential for defence use, enhancing overall defence capability.
• Enabling Capabilities: Investment in manufacturing technologies that enhance Australia’s industrial capacity, including advanced manufacturing, materials technologies, semiconductors, AI technologies, quantum technologies, robotics, and emerging space technologies.

Assessment Process

• Nature of the Grant: Competitive.
• Evaluation Criteria: Applications are assessed by the NRFC based on criteria outlined in the NRFC Act and its Investment Mandate. This involves balancing public policy impacts with return and risk. Key criteria include
  • Return on Investment: Achieving the target portfolio rate of return.
  • Positive policy outcomes: alignment with goals such as enhancing industrial capability, improving economic diversity, attracting private finance, supporting decarbonisation, creating secure jobs, bolstering supply chain resilience, commercialising Australian innovation, promoting economic participation for underrepresented groups, and fostering sustainability and regional development. We favour proposals that demonstrate multiple positive impacts.
  • Investment Readiness: The readiness of the investment proposal.
  • Co-investment: Preference for proposals with credible co-financiers or investment partners.

Recent Program Updates

The National Reconstruction Fund Corporation (NRFC) was established on 18 September 2023, under the National Reconstruction Fund Corporation Act 2023. The NRFC’s Investment Mandate and Priority Areas Declaration came into effect in late 2023, providing clear guidelines for its operations and investment focus. These legislative instruments define the NRFC’s purpose, functions, and the commercial approach it must take. The fund is actively soliciting investment proposals and has already announced its initial investments. The broader Future Made in Australia Act 2024 has also passed Parliament, reinforcing the government’s commitment to industrial transformation, though specific direct impacts on the NRF’s established legislative framework are not noted as new changes.

Application Tips

• Carefully review the NRFC Act and the Investment Mandate to understand investment criteria.
• Please make sure your proposal clearly aligns with one or more of the seven priority sectors.
• Demonstrate a clear pathway to a positive return on investment or debt repayment.
• Prepare a comprehensive Australian Industry Participation Plan if required.
• Highlight how your project contributes to broader policy outcomes, like decarbonisation, job creation, and supply chain resilience.
• Showcase your project’s investment readiness and potential for co-investment.

Where to Get Help

Consider consulting a professional grant specialist like Pattens Group. We offer initial assessments to review your business’s eligibility and evaluate how well your project aligns with the grant’s objectives. You can also visit relevant government websites for application templates and further guidance.

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