Middle Arm project: the infrastructure enabler for Northern Territory development

Darwin’s proposed Middle Arm Sustainable Development Precinct is set to be the heart of a new integrated infrastructure network in the Northern Territory, larger and better than what currently exists in northern Australia.
However, the project’s success depends on coordinated financial support between the Northern Territory and federal governments. More attention needs to be paid to the current model of federal funding, which risks limiting the project’s development and reducing its benefits.
Developing northern Australia’s economic opportunities presents both a challenge and an opportunity for the rest of the country. The Northern Territory’s geostrategic position and its vast natural resources, including its renewable energy potential, world-class gas reserves and mineral deposits, help maintain Australia’s role as a key player in global energy and mineral supply chains.
The precinct, still in its early stages of planning, will be spread over 15 square kilometres of newly developed land and include common user infrastructure such as roads, renewable power networks, water supply, telecommunications, infrastructure corridors, a module offloading facility and a shipping channel.
The Northern Territory government is also developing a large pipeline of enabling infrastructure projects, each with some level of interdependency on the precinct. These include enabling infrastructure and new industries such as:
—A proposed ship lift facility in Darwin Harbour;
—Carbon capture, utilisation and storage facilities built around the existing INPEX (Ichthys onshore LNG) and Santos (Darwin LNG) gas facilities;
—Large-scale solar and hydrogen projects, such as the proposed solar farm associated with SunCable’s Australia-Asia PowerLink project;
—Water infrastructure projects such as the Adelaide River Off-stream Water Storage project and the return to service of the Manton Dam; and
—A marine industry park.
Although the Middle Arm project is a joint effort between the federal and Northern Territory and governments, federal support for it has changed over time.
In 2021, the Liberal government allocated $2 billion for the precinct. This would be granted to the Northern Territory government to fund the $1.5 billion common user marine infrastructure, $200 million road upgrades and a $300 million carbon capture and storage manifold.
The revenue generated from these assets would set the territory on a path of self-generated revenue, which would then fund critical infrastructure across the region including police, health and education facilities.
However, when the current Labor federal government took over in 2022, it switched the funding profile to an equity style arrangement of $1.5 billion for common user marine infrastructure, leaving the road upgrades and carbon capture and storage manifold unfunded.
The key difference between these two commitments is not the amount of funding, but the way in which the funding is given.
Under the previous Liberal-National federal government, the territory government did not have to pay back the money, which was intended as a grant. But with the current model of equity investment, the territory is expected to make a positive return on investment and pay back the funds with interest.
This means the territory will need to draw down on its self-generated revenue, which in turn will make it more difficult and costly to comprehensively develop the precinct and increase the risks for the territory. While the loan clearly demonstrates strong federal support for the project, it will reduce the benefits to northern Australia in the short term.
Another key element of the Middle Arm project is provision of strategic infrastructure corridors for transmission of feedstock and export products including gas, water and high voltage power. Energy availability and cost determines the capacity and economics of advanced industry. By combining energy generation, storage and energy-intensive industry in a single precinct, the project aims to unlock the territory’s capacity to progress further down the commodity supply chain.
Northern Australia’s lack of infrastructure and energy grid issues—despite producing most of Australia’s LNG—are consistent stymying factors for economic growth. The precinct’s concentration of supply and customers will reduce the inherent challenges of distance and localises infrastructure needs, allowing it to host manufacturing projects that are unfeasible across the rest of the territory.
A strong Northern Territory means a strong Australia. Despite the territory’s relatively small population and voice on the national stage, it is crucial for the country that it grows economically and develops into a more prosperous, strategically vital region.
The precinct is set to be a holistic, integrated network that combines big projects with infrastructure enablers, creating more favourable economies of scale. This type of systems thinking is vital for development in the north, but support from the nation remains crucial, and close attention must be paid to the terms of that support.