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The Conversation

  • Written by Michelle Grattan, Professorial Fellow, University of Canberra

Gina Rinehart has partnered with a Chinese company to buy the giant Kidman pastoral empire, after two previous bids by Chinese buyers were rejected by the federal government.

Under the proposed sale Hancock Prospecting and Shanghai CRED are forming a joint venture company, Australian Outback Beef (AOB), owned 67% by Hancock and 33% by Shanghai CRED.

The sale is worth a net $365 million after the carve out of Anna Creek station in South Australia, valued at about $14-$18 million.

Of three bids for the Kidman land, this is the first with majority Australian interests. The privately owned Shanghai CRED was involved in the earlier bids, both of which were knocked out by Treasurer Scott Morrison. It has recently bought land in Western Australia.

But the offer must run the gauntlet of the federal government’s foreign investment regime which means being examined by the Foreign Investment Review Board, with approval or rejection then up to Morrison. It is also subject to various Chinese government approvals.

It is thought this bid, with its majority local ownership, is likely to be better placed than the earlier ones to navigate the hurdles.

Its 33% foreign ownership is marginally below the 33.9% present foreign ownership – mostly British - of Kidman.

Gina Rinehart is also very close to Deputy Prime Minister Barnaby Joyce, who has been a critic of the Chinese push for Australian land.

The offer is conditional on the sell off of Anna Creek and the Peake, an associated property, to other Australian grazing interests.

Anna Creek overlaps the Woomera test area and security considerations were key to the rejection of the first of the two previous bids, although the total amount of land involved was also a major factor.

The rejection of the second bid came shortly before the federal election, when Chinese investment was seen as an issue.

The Kidman empire has 19 individual properties operated as 12 enterprises, including 10 cattle stations, a bull breeding stud and a feedlot.

It has pastoral leases covering 101,000 square kilometres across South Australia, Western Australia, the Northern Territory and Queensland, and an average herd carrying capacity of 185,000 cattle.

Rinehart, chairman of the Hancock group, said: “Kidman is an iconic cattle business established more than a century ago by Sir Sidney Kidman. It is an operation founded on hard work and perseverance by an outstanding Australian, and it is an important part of Australia’s pioneering and entrepreneurial history.”

The CEO of Hancock, Garry Korte, said the quality of the Kidman herd and channel company properties would complement Hancock’s existing northern cattle properties, and align well with Rinehart’s plans to build a diversified cattle holding in Australia. The Hancock family started their first cattle station in north west Australia.

Principal of Shanghai CRED, Gui Guojie, said partnering with leading local business Hancock had already proved a productive approach and he looked forward to having the opportunity to work with Hancock through the Kidman investment.

The Kidman business went on the market nearly 18 months ago and more than 600 interested parties have held discussions with the sales manager Ernst and Young.

Authors: Michelle Grattan, Professorial Fellow, University of Canberra

Read more http://theconversation.com/morrison-to-rule-on-hancock-chinese-bid-for-kidman-cattle-empire-66750

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