Courtesy of the New York Times, a report on a prohibited land sale in Australia:
A government ban on foreign investors buying a pioneering dynasty’s collection of cattle ranches has scuttled Australia’s biggest land sale, an official said on Friday.
The government announced on Thursday it had barred foreigners from buying S. Kidman & Co. Ltd. The family-owned company owns 10 cattle ranches, a bull breeding stud and a feed lot covering 101,411 square kilometers (39,155 square miles) in four states. That’s an area bigger than South Korea and almost as big as the U.S. state of Virginia
Don Manifold, a director of Ernst and Young who is managing the sale, said on Friday that the decision ruled out the few consortiums that remained in the bidding process. He declined to disclose the nationalities of those bids.
Australia’s Foreign Investment Review Board, or FIRB, found that the sale to foreign investors would be contrary to the national interest.
Kidman owns the world’s biggest cattle ranch, Anna Creek Station, which covers 23,677 square kilometers (9,142 square miles) of arid central Australia. Half of it is inside the 122,188 square kilometer (47,177 square mile) Defense Department-controlled Woomera Prohibited Area, or WPA, the world’s largest rocket firing range.
“The WPA weapons testing range makes a unique and sensitive contribution to Australia’s national defense and it is not unusual for governments to restrict access to sensitive areas on national security grounds,” Treasurer Scott Morrison said in a statement.
“Given the size and significance of the total portfolio of Kidman properties along with the national security issues around access to the WPA, I have determined, after taking advice from FIRB, that it would be contrary to Australia’s national interest for a foreign person to acquire S. Kidman and Co. in its current form,” he added.
Morrison left open the possibility of the company being split up and partially sold to foreign interests without Anna Creek.
But Manifold described the size consideration in the decision to ban foreign ownership as nebulous.
“If it’s too big, then the question is how small does it have to be to work?” Manifold asked.
The FIRB rarely intervenes in corporate sales. But increasing foreign ownership of Australian farmland has become a politically sensitive issue.
Media speculated that the company would sell for more than 300 million Australian dollars ($210 million).
At least one Chinese bidder was interested in buying the Adelaide-based company, which was founded by beef baron Sir Sidney Kidman in 1899 and is owned by his descendants.
The Defense Department blocked two Chinese investments in mines on security grounds in 2009 because they were within the Woomera range.
Prime Minister Malcolm Turnbull talked down prospects of a Chinese government backlash over the foreign ownership ban.
“You would be wrong to assume that there was only one foreign country associated with the buyers. So there’s no issue of discrimination here,” Turnbull told reporters while attending a summit in the Philippines.
The Australian beef industry is emerging from years of low profitability due to drought and a high Australian dollar inflated by a mining boom that has now passed.
Despite the size of Kidman’s land holdings, its ranches are largely semi-desert and carry only an average herd of 185,000 cattle, which is a fraction of a percent of the total Australian herd.
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