Nioa, which began in 1985 making guns and ammunition for recreational shooters, is to share the site that is already home to Benalla’s long-standing munitions factory operated by Thales. 

Defence Minister Christopher Pyne announced Nioa’s tenancy of the federally-owned site during an industry expo in Adelaide on Tuesday.

Nioa will manufacture tank, armoured vehicle and artillery ammunition which is currently imported.

“Nioa's work in Benalla will build further on their work supplying ammunition to Defence, and leverage their partnerships with some of the world’s leading munitions companies,” he said.

“I look forward to Nioa producing and eventually exporting munitions from Benalla to our friends and allies.”

Nioa has been a defence department contractor since 1996 with the Brisbane firm’s managing director Robert Nioa saying its success in winning three major supply deals last year was the catalyst for the Benalla expansion.

As part of goals for regional economic benefits, Nioa was requested by the Commonwealth to consider its Benalla site for manufacturing the ammunition never previously made in Australia.

“They asked us specifically how we could better use the Benalla ammunition plant because it contained a series of seldom used buildings and we did a survey and identified a series of building we could use for domestic manufacture,” Mr Nioa said.

“We’re going to start with one building, but there are multiple buildings which ultimately will be required.”

A site office is expected to be operating by November with two employees, with significant production jobs likely to emerge in 2020.

“The total maximum could be up to 100 people, but it might take two years before we build up to that,” Mr Nioa said.

Initial ammunition, for the Carl Gustav recoilless rifle, is expected to be produced in the first quarter of next year.

Mr Nioa said he was expecting defence advice in the next eight weeks to approve work until June 2020 with further feedback in the first half of 2019 for work beyond mid-2020.

Nioa has also bought 121 hectares of industrial zoned land adjoining the Benalla factory which it will bank for future production. 

Meanwhile, Thales also on Tuesday announced a deal with defence products company Chemring Australia to jointly work on a new range of grenades.

They will be designed and made at Thales’ Benalla and Mulwala factories as well as Chemring’s plant near Geelong.

The partnership is expected to shore up existing jobs at the Thales’ sites, rather than create new positions.

Managing director for the Benalla and Mulwala plants Dion Habner said the agreement would help “deliver a battle winning capability to Australia’s warfighter”.