National Reconstruction Fund bets on Queensland mining equipment manufacturer

More than a year after its establishment, the $15bn off-budget investment vehicle has picked Toowoomba-based Russell Mining Equipment as its first recipient for funds.

Industry and Science Minister Ed Husic will unveil the $40m capital injection for Russell Mining Equipment. Picture: NewsWire / Martin Ollman

Labor’s $15bn National Reconstruction Fund, the Albanese government’s primary vehicle to rebuild Australia’s industrial base, has made its first investment, ploughing $40m into Queensland resources equipment manufacturer Russell Mining Equipment.

More than a year after the fund’s establishment, Industry and Science Minister Ed Husic will on Tuesday unveil the NRF’s inaugural equity injection, claiming the funding deal will “ensure RME stays in Toowoomba in Aussie hands”.

“Driven by the vision to help grow our industrial capabilities, this is the first in what will be a long line of investments the NRF makes to rebuild our sovereign manufacturing capability and grow high wage, high skill jobs onshore,” Mr Husic said.

Established in 1985, the mining equipment manufacturer has more than 450 employees worldwide and reported a net profit after tax of $12.1m in the 2022-23 financial year.

Supplying more than 440 mines sites internationally, the company manufactures robotic machines designed to re-line grinding mills that crush hard rock containing metals such as copper, gold, platinum, nickel, zinc and iron ore.

The funding deal forms part of a larger $100 million partnership with Resource Capital Funds, a mining-focused private equity firm, which will scope extra investment opportunities in the sector.

NRF chair Martijn Wilder said RME had “ticked all the boxes” for the corporation, with the fresh ­equity enabling the firm to expand its overseas operations. “The $40m gives them an opportunity to stay where they are, build that out, hire more people, commercialise the innovation they’ve already got and continue to meet the global demand,” he said.

“Finance looks at these sorts of new areas and is a little bit more risk averse towards them. So to be able to help RME continue that success story is pretty important.”

Established by the Albanese government in September 2023, the NRF provides funding across seven “priority areas” including renewables, defence capability, agriculture, transport and medical science.

Creation of the off-budget fin­ancing vehicle, expected to generate a commercial return, has sparked concerns from some industrial policy experts and economists who say the scheme risks propping up otherwise uncompetitive sectors.

The protracted process of the NRF, which until Tuesday had been yet to make any investment, has been the subject of extensive Coalition scepticism, with opposition industry spokeswoman Sussan Ley chief among its critics.

“It has taken Labor over 900 days to announce a single investment through their National Reconstruction Fund; over that time we have seen 1272 manufacturers go to the wall – that is not a winning economic ratio for our ­nation” Ms Ley said.

“Even if it makes a few investments before the end of this term of government, Labor’s National Reconstruction Fund has comprehensively failed to deliver what was promised.”

Mr Wilder dismissed concerns that the NRF had been slow to move, claiming it had done a “very solid job” in hiring key staff and establishing its investment process, while deploying capital at a faster rate than comparable off-budget funding vehicles.

“The truth is that it takes a considerable amount of time to stand up an organisation to assess and go through detailed due diligence of investments and make sure that you’re doing a responsible job to manage public money,” he said.

“There’s a growing number of well advanced investments in the (NRF’s) pipeline, and we expect in the next six months to make a solid number of announcements.”