Fortescue Metals Group has partnered with ANZ to set up a $50 million leasing facility for indigenous-owned businesses that have contracts with the iron ore miner.
The initiative will let eligible businesses access finance at competitive rates through ANZ in order to lease required assets, supported by a guarantee from Fortescue.
Fortescue has awarded nearly $2 billion in contracts to 105 Aboriginal-owned businesses and joint ventures since 2011, under its Billion Opportunities programme.
These include contracts for freight and logistics, fuel supply, procurement of services, infrastructure maintenance and transport.
The company has also committed to spending 10 per cent of total procurement with Aboriginal businesses by 2021.
However Fortescue chief executive Nev Power said consultation with communities in the Western Australia Pilbara region had revealed that one of the key impediments to the growth of indigenous businesses was funding.
“They don’t have a credit history, a lot of them don’t have a business history to be able to put to banking institutions,” Mr Power said at an event in Sydney.
“So they have been forced to hire equipment at very high rates to provide services that we are asking them to provide and that has meant their margins have been squeezed or they haven’t been able to invest in income generating assets.”
Fortescue’s guarantee will allow the development of a normal business-banking relationship, by effectively providing a level of credit history for the business.
ANZ’s managing director for institutional banking Graham Turley said the new funding initiative will help aboriginal businesses develop long term capabilities.
“We believe this initiative will help aboriginal businesses grow, create financial independence and drive economic growth and employment opportunities for local communities,” he said.