Rio Tinto and the Northern Territory Government injected A$2 million each in seed funding to get DEAL off the ground

Finding ways to stimulate business growth outside the mining sector was key to securing a sustainable future

The DEAL model is being considered by other communities across Australia and internationally

East Arnhem Land, tucked away in the remote far north-eastern corner of Australia’s Northern Territory, has a long history of entrepreneurialism. For several hundred years the region’s Traditional Owners, the Yolngu people, traded with the Macassans from the Indonesian island of Sulawesi, who visited each year to collect sea cucumbers to sell to China.

For 40 years the Gove alumina refinery and bauxite mine had been the mainstay of the north East Arnhem region. Bauxite was discovered in the region in the early 1960s, and within a decade mining had begun. Once mined, the bauxite was transported on a 20 kilometre-long conveyor to the refinery at Melville Bay. Here it was processed into alumina and shipped overseas, where it was smelted into aluminium metal.

The operation continued successfully for many years. But faced with challenging market conditions and despite efforts to improve performance, in November 2013 Rio Tinto made the difficult decision to curtail the refinery’s production.

The announcement was met with apprehension by people in the region and in the town of Nhulunbuy – a purpose-built mining town and the region’s main centre. Following curtailment, the size of Rio Tinto’s local workforce was reduced from 1,400 to around 300 personnel. Over an eight month period the town’s population fell from 4,000 to 2,500 people.

About East
Arnhem Land

About East
Arnhem Land

East Arnhem Land covers about 34,000 square kilometres – that’s roughly the size of Belgium.

East Arnhem Land covers about 34,000 square kilometres – that’s roughly the size of Belgium.

The region has a population of approximately 11,000, of whom over 8,000 are Traditional Owners. The Yolngu people have lived in the region for at least 50,000 years and practice the longest continuous traditional culture in Australia, maintaining strong ties with their land, religion and customs.

A deal to stimulate growth

Rio Tinto’s management team were acutely aware of the challenges that lay ahead for the region following the refinery’s curtailment.

In 2014 the company partnered with the Northern Territory Government to fund the establishment of the independent not-for-profit company Developing East Arnhem Limited (DEAL). One of many initiatives aimed at supporting the community through the changes, DEAL was created to drive economic diversification and stimulate new opportunities in the region. Rio Tinto and the Government injected A$2 million each in seed funding to get DEAL off the ground.

“The region, rich in natural and cultural resources, has a bright and vibrant future where the Yolngu land owners, together with residents of the vibrant town of Nhulunbuy, have the opportunity to create jobs and sustainable business and to ensure all benefit from this extraordinary part of the Territory,” said Michael Gunner, Northern Territory chief minister.

“The Northern Territory is working closely with DEAL and the Regional Economic Development Committee to progress a range of smaller and larger scale projects which will position the region for prosperity into the future.”

Finding ways to stimulate business growth outside the mining sector was key to securing a sustainable future.

The town had been relatively reliant on mining, and the refinery’s curtailment created both direct and indirect impacts. With fewer people living in town there was concern that local businesses would suffer, and the community found themselves contemplating the town’s future.

“The rationale to fund DEAL’s establishment alongside the Government was to create an independent entity focused on sustainable economic development opportunities beyond mining,” said Ryan Skehan, principal adviser Economic Development in Rio Tinto’s Aluminium business.

Developing East Arnhem Limited (DEAL)

"Key to the survival of regional towns is to stabilise the population – and employment opportunities are critical to that,” Ryan said.

"A stable population also helps maintain vital services such as education and health services, which are a fundamental part of any sustainable community."

To help create employment opportunities, DEAL established the Economic Development Fund to finance business growth projects that would deliver sustainable job outcomes for the region.

Since launching in 2015, the Fund has made more than A$1 million available for business growth and start-up projects, creating 38 direct jobs in the region. The DEAL Board assesses applications using data from an economic modelling tool to identify projects that will have the greatest impact on the region.

"We have someone coming to our office to discuss new business ideas regularly," said Carley Scott, chief executive of DEAL.

Nhulunbuy business owner Zen Bajraktari shares his story

Since its inception the Fund has supported over ten local projects across the tourism, health, retail, marine services, education and training, construction and hospitality industries.

Its success can also be measured in the size of the Fund growing from A$200,000 to A$500,000 per year when it began, to A$1 million per year for the 2017/2018 financial year.

In addition to the Fund, Carley also pointed to successful partnerships in key sectors, such as tourism, and with non-profit organisations aimed at supporting Indigenous businesses.

"Our partnerships have linked local communities and businesses with Intrepid, the tour company, and our tourism development programmes are supporting the Indigenous art centre and jobs growth in Indigenous eco-tourism.

"We established a partnership with the not-for-profit organisation Many Rivers to provide business development support for remote Indigenous communities and homelands.

"The Many Rivers field officer is currently working with around 35 clients across the region," Carley said.

East Arnhem Land East Arnhem Land
East Arnhem Land

Room to grow

Access to housing was also identified as a key constraint to growth in the town. Businesses couldn't expand because there wasn't access to affordable rental housing to accommodate new employees.

To address this, Rio Tinto is providing DEAL with up to 250 residential properties previously used for refinery workers so that eligible businesses can accommodate staff. The housing is only accessible to employers that have demonstrated viable alternatives do not exist, ensuring the local private rental market is adequately maintained.

Known locally as "DEAL Housing", it's been recognised as an innovative economic development approach that’s already paying off.

"Access to rental housing was one of the key impediments to economic growth in the region.

"By increasing supply and resetting the rental market pricing, new businesses have been attracted to the region and existing businesses have been able to expand,” Ryan Skehan said.

Once-empty houses are now homes to more than 200 local employees, and rent from these assets is fed back into local economic development through housing maintenance works and other DEAL projects including the Economic Development Fund.

"One of the most pleasing aspects of the housing programme is that the revenue is reinvested back into DEAL and local initiatives," Ryan said.

"This ensures DEAL is self-sustaining and not reliant on government or industry grants for survival."

And feedback suggests it's helping local businesses too.

"We are using DEAL Housing more and more. It's great to access housing – especially if we need to employ someone quickly," Murray Knyvett, general manager of Indigenous excavation and earthmoving business YBE, said in DEAL's 2015-2016 Annual report.

"DEAL Housing has helped to enable us to convert our workforce to a local workforce rather than rely on remote workers being flown in. It works out cheaper to house a worker locally."

Creating new
opportunities in
East Arnhem Land

Creating new
opportunities in
East Arnhem Land

  • East Arnhem Early Learning Centre: DEAL part funded the extension of the community-owned East Arnhem Early Learning Centre, creating two jobs during the construction phase of the project and at least two ongoing full-time positions. The extension provides space for an additional 30 children in an “out of school hours” programme, indirectly supporting employment by allowing more parents in the region to return to work.
  • Gideon’s Bush Espresso: DEAL helped locals Sarah and Stephen McArthur start their mobile coffee business which has become a popular refreshment stop for locals and visitors alike. DEAL funding enabled the McArthur’s to purchase a customised van, employ young locals and provide fresh coffee at workplaces, sports grounds and events outside Nhulunbuy’s main town centre.
  • Arnhem Allied Health Centre: DEAL funded the internal construction and fit-out of a purpose-built health hub for the community. The Centre provides access to health services and enables independent health providers to develop businesses from the premises (pictured).
  • Banubanu Wilderness Retreat: DEAL contributed funding for three new eco-tents at the Banubanu Wilderness Retreat, helping to support tourism in the region. The eco-friendly retreat, owned by locals, is situated on Bremer Island and generates income for the local Yolngu Traditional Owners.

Photo credit: Matt Burnam Photography

A model for economic transition

DEAL is delivering tangible outcomes for the region, and in 2016 was recognised as the best rural and remote area initiative at Economic Development Australia's National Economic Development Excellence Awards.

The DEAL model is also now being considered by other communities across Australia and internationally.

"DEAL's point of difference is that we are an independent, not-for-profit entity that is highly responsive, self-funded and able to focus on the best interests of the region," Carley said.

"We don’t take an equity stake and we don’t have a regulatory role.

"We purely look at appropriate local economic development, helping businesses to grow, and making connections for the business into the local community."

DEAL provides seed funding to help local businesses grow

The Gove bauxite mine continues to play an important role in the region, employing more than 300 people and contributing A$300 million to the Northern Territory economy through salaries, payments to suppliers and taxes in 2016.

But the region has much more to offer and despite the challenges the town has faced in the past, Carley Scott is confident East Arnhem Land has a bright future. The foundations to support diversification and growth are in place, and optimism is now flowing back into the community.

"Our work involves a range of sector development initiatives supporting the health, tourism, technology, culture and fisheries industries.

"People are realising that Nhulunbuy is not just a mining town – it's also a crucial hub for many thousands of people living, working and visiting in the region," Carley said.

"There are always challenges in a town that’s going through a significant transition.

"We've seen a really interesting story develop from the early stages of curtailment filled with trepidation, to a community that knows they are doing well and that the future is, with ongoing work, looking bright for Nhulunbuy and the broader East Arnhem Region."