REPLACEMENT EXPLANATORY STATEMENT
Issued by the authority of the Minister for Industry and Innovation
Industry Research and Development Act 1986
Industry Research and Development (Green Iron Investment Fund—National Development Stream Program) Instrument 2025
Purpose and Operation
Section 33 of the Industry Research and Development Act 1986 (the IR&D Act) provides a mechanism for the Minister to prescribe programs, by disallowable legislative instrument, in relation to industry, innovation, science or research, including in relation to the expenditure of Commonwealth money under such programs.
The statutory framework provided by section 33 of the IR&D Act enables a level of flexibility to provide authority for Commonwealth spending activities in relation to industry, innovation, science and research programs. This allows the Government to respond quickly and appropriately to the need to implement innovative ideas and pilot programs on an ongoing basis and as opportunities arise. Prescribing programs in legislative instruments provides transparency and parliamentary oversight of Government programs and spending activities, whilst reducing administrative burden on the Commonwealth.
Once a program is prescribed by the Minister under section 33, subsection 34(1) allows the Commonwealth to make, vary or administer arrangements in relation to activities under the prescribed program. Arrangements may include contracts, funding agreements or other arrangements, and may provide for money to be payable by the Commonwealth to one or more third parties. The power conferred on the Commonwealth by subsection 34(1) may be exercised on behalf of the Commonwealth by a Minister or an accountable authority of a non-corporate Commonwealth entity, or by their delegate (under section 36).
The purpose of the Industry Research and Development (Green Iron Investment Fund—National Development Stream Program) Instrument 2025 (the Legislative Instrument) is to prescribe the Green Iron Investment Fund—National Development Stream Program (the Program). The funding for the Program has been announced through the Department of Industry, Science and Resources (the Department) 2025-2026 Budget. The Program forms part of the $1 billion Green Iron Investment Fund and is part of the Australian Government’s commitment to support green metals as a priority sector under a Future Made in Australia. At least $500 million of the Green Iron Investment Fund will be allocated to the Program.
The objectives of the program are to:
- De-risk early mover capital investments in Australian commercial scale green iron production capability;
- Crowd-in private investment for a strong green iron industry;
- Create economic benefits, jobs and spillovers associated with a strong green iron industry; and
- Achieve community benefits, in line with Future Made in Australia Community Benefits Principles.
The outcomes of the program are to:
- Transform Australia’s national, regional and/or local economies by establishing or transitioning commercial green iron production capability - including up and down stream industrial capabilities; and
- Contribute to emissions reduction in the steel value chain, in line with global and domestic decarbonisation ambitions.
Funding is available to successful entities incorporated in Australia, companies limited by guarantee, and incorporated trustees on behalf of a trust, to undertake eligible projects to support activities related to establishing a green iron facility.
Funding authorised by this Legislative Instrument comes from Program 1.1, Outcome 1, as set out in the Portfolio Budget Statements 2025-26, Budget Related Paper No. 1.11, Industry, Science, and Resources Portfolio (https://www.industry.gov.au/sites/default/files/2025-03/2025-26-department-of-industry-science-resources-pbs.pdf) at page 23.
The Program will be delivered by the Business Grants Hub (BGH) which is a specialised design, management and delivery body within the Department with extensive expertise and capability in delivering similar scale programs.
The Program is an open competitive, merits-based grants program. The Program is administered by the Department in accordance with the Commonwealth Grant Rules and Principles 2024 (https://www.legislation.gov.au/F2024L00854/latest/text). Eligibility and assessment criteria will be outlined in the Program guidelines at business.gov.au.
Spending decisions will be made in accordance with subsection 34(2) of the IR&D Act.
A minimum of $500 million is available. The grant amount may be up to 25 per cent of eligible project costs. No more than 65 per cent of eligible project costs can be funded from Commonwealth, State, Territory or local government grants. The project cannot be entirely funded from government backed sources.
The Program involves the allocation of finite resources between competing applicants and therefore falls within the category of decisions that would not usually be subject to merits review according to paragraph 4.11 of the Administrative Review Council guide, What decisions should be subject to merits review? available at https://www.ag.gov.au/legal-system/publications/arc-what-decisions-should-be-subject-merit-review-1999. In addition, there is a robust and extensive assessment process, an enquiry and feedback process, and an existing complaints mechanism for affected applicants. Therefore, external merits review is unsuitable for decisions about the provision of grants under the Program.
Applications will be assessed against the eligibility criteria and assessment criteria set out in the Program guidelines. Applications will be compared and scored out of 100. Funding will only be awarded to applications that score at least 50 per cent against each assessment criterion. Applications will be assessed by two assessment panels which may comprise of representatives from the Australian Government and individuals with relevant expertise outlined in the Program guidelines. Both panels may also seek additional advice from third party sources including independent technical experts or advisors to inform the assessment process.
Applications must address the eligibility and assessment criteria and provide relevant supporting information as set out in the Program guidelines. The amount of detail and supporting evidence should be relative to the project size and complexity, and the funding amount requested. Larger and more complex projects should include more detailed evidence. To be competitive, applications must score highly against each merit criterion
Applications will first be reviewed against the eligibility criteria. If eligible, applicants will attend an interview with an expert Technical Assessment Panel to confirm the proposed technology and sustainable components underpinning the project are viable and achievable within the project period. The Technical Assessment Panel will assess the project against assessment criterion 1, which addresses the capability of the project to meet decarbonisation objectives and technological viability.
Only applications that score at least 50 per cent in assessment criterion 1 will progress to the expert Commercial Viability Assessment Panel. This Panel will assess the application against the remaining assessment criteria and all attached evidence. They will assess whether applicants have the financial resilience, capability and capacity to co-fund, secure investment and achieve commercialisation within the project period, and will consider the findings from the Technical Assessment Panel on criterion 1 to then rank applications in preparation for recommendations to the Minister.
After considering the ranking prepared by the Commercial Viability Assessment Panel, the Department will make recommendations to the Minister regarding those applications suitable for funding. The Minister will make the final decision about which grants to approve. Prior to making their decision, the Minister will consult with Cabinet, and take into consideration the Department’s recommendations, and the availability of grant funds. The Minister will have regard to the proposed community benefits expected from the recommended projects when making funding decisions. The Minister will not approve funding if there are insufficient Program funds available across relevant financial years for the Program.
Both successful and unsuccessful applicants will be informed in writing. Unsuccessful applicants have an opportunity to discuss the outcome with the Department.
Persons who are otherwise affected by decisions or who have complaints about the Program will also have recourse to the Department. The Department investigates any complaints about the Program in accordance with its complaints policy and procedures. If a person is not satisfied with the way the Department handles the complaint, they may lodge a complaint with the Commonwealth Ombudsman.
Statement of the Relevance and Operation of Constitutional Heads of Power
For the purposes of subsection 33(3) of the IR&D Act, the legislative power in respect of which the Legislative Instrument is made is the external affairs power in paragraph 51(xxix) of the Constitution.
External affairs power
Section 51(xxix) of the Constitution empowers the Commonwealth Parliament to make laws with respect to ‘external affairs’. The external affairs power supports legislation implementing Australia’s international obligations under treaties to which it is a party. Australia has obligations relevant to this legislative instrument under the following treaties:
- the Kyoto Protocol to the United Nations Framework Convention on Climate Change done at Kyoto on 11 December 1997 ([2008] ATS 2) (Kyoto Protocol), particularly Article 10;
- the Paris Agreement done at Paris on 12 December 2015 ([2016] ATS 24) (Paris Agreement), particularly Article 4; and
- the United Nations Framework Convention on Climate Change done at New York on 9 May 1992 ([1994] ATS 2) (United Nations Framework Convention on Climate Change), particularly Article 4.
Article 10(b) of the Kyoto Protocol requires Parties to implement national and regional programmes containing measures to mitigate climate change, including measures relating to the abatement of increases in greenhouse gas emissions, which may concern the energy, transport and industry sectors. Article 4(2) of the Paris Agreement obliges Parties to take domestic measures ‘with the aim of achieving the objectives’ of a nationally determined contribution. Australia’s Nationally Determined Contribution is to reduce greenhouse gas emissions to 43% below 2005 levels by 2030, and to produce net zero emissions by 2050. Under Article 4(19), Australia is also obliged to ‘strive to formulate and communicate long-term low greenhouse gas emission development strategies’.
Article 4(1)(b) of the UNFCCC requires Parties to formulate, implement, publish and regularly update national and, where appropriate, regional programmes containing measures to mitigate climate change by addressing anthropogenic emissions. Article 4(2)(a) requires developed country Parties to commit themselves to adopt national policies and take measures on the mitigation of climate change.
Funding provided under the Legislative Instrument will provide support for prospective green iron producers and secure investment for a green iron industry in Australia, which may ultimately help Australia achieve its 2030 and 2050 targets and contribute to emissions reduction in the steel value chain, in line with global and domestic decarbonisation ambitions.
Further details of the Legislative Instrument are set out at Attachment A.
Authority
Section 33 of the IR&D Act provides authority for the Legislative Instrument.
Consultation
The Department conducted public consultation during the Unlocking green metals opportunities for a Future Made in Australia consultation process which ran between 31 May and 14 July 2024. The Department received 90 responses from a range of stakeholders including industry, peak industry bodies, academia, government and more.
Additionally, the Department conducts ongoing consultation with the Industrial Decarbonisation and Green Metals Advisory Panel (the Advisory Panel) on the green metals agenda, including green iron. The Department engaged with the Advisory Panel for targeted consultation on the Program in June 2025.
Insights from these consultation processes helped to inform program settings.
In accordance with section 17 of the Legislation Act 2003, the Attorney-General’s Department has been consulted on this Legislative Instrument.
Regulatory Impact
It is estimated that the regulatory burden is likely to be minor (Office of Impact Analysis reference number OIA24-07963).
Statement of Compatibility with Human Rights
A Statement of Compatibility with Human Rights for the purposes of Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 is set out at Attachment B.
Attachment A
Details of the Industry Research and Development (Green Iron Investment Fund—National Development Stream Program) Instrument 2025
Section 1 – Name of Instrument
This section specifies the name of the Legislative Instrument as the Industry Research and Development (Green Iron Investment Fund—National Development Stream Program) Instrument 2025.
Section 2 – Commencement
This section provides that the Legislative Instrument commences on the day after registration on the Federal Register of Legislation.
Section 3 – Authority
This section specifies the provision of the Industry Research and Development Act 1986 (IR&D Act) under which the Legislative Instrument is made.
Section 4 – Definitions
This section provides for definitions of terms used in the Legislative Instrument.
For the purpose of this Program, green iron is defined as a concentrated iron metal made from the reduction of Australian iron ore by using a lower emissions reducing agent. Examples of lower emissions reducing agents could include renewable hydrogen, renewable energy or natural gas, where there is a pathway to renewable alternatives.
Section 5 – Prescribed Program
This section prescribes the Program for the purposes of section 33 of the IR&D Act.
The Program provides funding that supports commercial scale green iron production capabilities in Australia. This will be done by providing grant funding to de-risk early mover capital investments in Australian commercial scale green iron production capability, primarily by funding capital works.
The meaning of ‘early movers’ and ‘commercial scale’ for the purposes of this Program will be defined in the Program guidelines.
The Program will contribute to emissions reduction in the steel value chain, in line with global and domestic decarbonisation ambitions.
The steel value chain refers to the network of processes involved in the production, distribution and consumption of steel. Ironmaking is a core component of steel production and the steel value chain.
Section 6 – Specified Legislative Power
This section specifies that the legislative power in respect of which the Legislative Instrument is made is the power of the Parliament to make laws with respect to external affairs (paragraph 51(xxix) of the Constitution).
Attachment B
Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
Industry Research and Development (Green Iron Investment Fund—National Development Stream Program) Instrument 2025
This Legislative Instrument is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
Overview of the Legislative Instrument
The Industry Research and Development (Green Iron Investment Fund—National Development Stream Program) Instrument 2025 (the Legislative Instrument) provides legislative authority to commit Commonwealth funding for the Green Iron Investment Fund—National Development Stream Program (the Program). The Program forms part of the $1 billion Green Iron Investment Fund and is part of the Australian Government’s commitment to support green metals as a priority sector under a Future Made in Australia. At least $500 million of the Green Iron Investment Fund will be allocated to the Program, with the profile of funding not for publication due to commercial sensitivities.
The Program will provide funding to de-risk capital investments in Australian commercial scale green iron production capability, primarily by funding capital works.
The program will contribute to emissions reduction in the steel value chain, in line with global and domestic decarbonisation ambitions.
Human rights implications
The Legislative Instrument does not engage any of the applicable rights or freedoms.
Conclusion
The Legislative Instrument is compatible with human rights as it does not raise any human rights issues.
The Hon Tim Ayres
Minister for Industry and Innovation