Cubbie's new owners look at water sale

15 Mar, 2013 04:25 AM
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THE new Chinese and Japanese ­owners of Cubbie Station are looking at selling water back to the federal government less then two months after paying $232 million for the debt-laden cotton farm.

The 96,000 hectare property in south-western Queensland has been the centre of controversy because of its huge water entitlements within the Murray Darling Basin system.

It officially changed hands on January 15 after being bought by CS Agriculture, a company backed by Chinese group Shandong Ruyi, Japanese trading giant Itochu, and fifth generation Australian wool trader Lempriere Group.

Speaking publicly on the sale for the first time, Lempriere Capital managing director Tony McKenna delivered a strong rebuke to critics of foreign investment in Australian agriculture, and also confirmed the water sale plans, The Australian Financial Review reports.

"We have committed to consider the option of selling any excess ­entitlements into water buyback schemes," Mr McKenna said at the Rural Press Club in Brisbane.

"At this stage, seven weeks into our ownership of Cubbie, we are reviewing it. A hydrology study into the impact of the sale of part of ­Cubbie's water rights has been commissioned."

The first federal government ­tender for the Condamine-Balonne Rivers catchment, where Cubbie ­Station is located, closed in February. Altogether $47 million of water was bought, at an average price of $1532 a megalitre.

Cubbie's new owners expect the tender to keep rolling, and that there will be further opportunities to sell water.

Cubbie Station has about 500,000 megalitres of water storage for its cotton crops.

"For Cubbie, with its massive investment in on-farm storages and irrigation infrastructure, any assessment needs to consider the cost of writing off the value of the infrastructure as well as the water entitlements sold," Mr McKenna said.

"We remain committed to constantly reviewing this and I can assure you it is given serious consideration at board level."

The station was in voluntary administration with McGrathNicol for three years and up for sale for a similar period. Drought and debts of more than $420 million to National Australia Bank and Suncorp made a sale difficult.

But Mr McKenna said the pressure from "a noisy minority" voicing their concerns over foreign investment was the primary impediment to proceeding with the deal to buy Cubbie.

"It took some work explaining to Ruyi that the government was not against them just because a bill was before parliament opposing their purchase of Cubbie," he said.

"There were times when it looked like it was all too hard. There were times when we were genuinely concerned that FIRB (the Foreign Investment Review Board) would not approve the acquisition.

"Chinese investors are worried about the FIRB process and whether they are welcome in Australia."

Last Friday China's richest man, Zong Qinghou, who is interested in buying Australian farms, told The Australian Financial Review he felt discriminated against in Australia, compared with Japanese or American investors.

"The treatment is not equal (with American and Japanese firms)," he said.

"The (Australian) media always reacts to Chinese investment, but there is no reaction at all to American investment."

Mr Zong's fortune is estimated at $US11.6 billion by Forbes magazine.

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READER COMMENTS

Jock Munro
15/03/2013 4:51:43 AM

What are Mr Zong's links to the Chinese Communist Government?! It would be highly unlikely(impossible in fact) that any Chinese citizen would become wealthy without the support of the non unelected Chinese Government. Wake up Australia.
Qlander
15/03/2013 8:59:51 AM

"The treatment is not equal (with American and Japanese firms)," he said. Perhaps because Japan and American are democracies. With a clear demarcation, between state and commercial interests. China on the other hand made it very clear during the BHP spying case, that it see no difference between state and commercial interests. Mr Zong Qingho is merely another arm (or front) of the Chinese ruling party.
brianm
15/03/2013 10:57:51 AM

Having an Australian shareholder is good. There were no buyers otherwise and Australians will benefit overtime keeping towns going and contractors etc helping maintain some of the disappearing "bush fabric". Any enterprise needs to make a profit and hopefully they can handle droughts or low rainfall seasons with good water conservation which has been sadly lacking in Eastern Australia.
Mabel Peyton Smyth
15/03/2013 1:38:14 PM

Obviously Jock Munro and Qlander were prepared to advance capital towards keeping Cubbie 100 per cent Australian. No don't worry about those that were owed squillions, the lack of jobs and the lack of local spending. The land has not moved, all that has happened is one form of finance has been replaced with another
chas watts
15/03/2013 2:22:36 PM

This says something about the Aussie billionaires who would rather sell TVs and Iphones to Gen Ys than invest in Australia's future.
Zero till
15/03/2013 7:07:31 PM

Without a single desk and buyer of last resort then the whole Cubbie deal is doomed. If we had orderly marketing then growing cotton at Rankin Springs would be easy!
Deregul8
16/03/2013 7:33:41 AM

Jock said "non unelected Chinese Government." As opposed to a non elected redhead led government? The only difference that exists between Australia and China is Australians still believe they have a democracy.
Jock Munro
16/03/2013 6:51:38 PM

Unfortunately Mabel Peyton Smith, Australia is being run by the urban based political elite who share your theoretical views that look good on paper but in reality are a practical disaster.
Alan NSW
16/03/2013 7:59:06 PM

Mabel Peyhon Smyth, what will you say when you find that the food and produce that is produced on Cubbie Station and other Chinese owned farms is being sent directly back to China to feed their own population, maybe we will be able to eat and survive on the finance you mention ...
dunart
16/03/2013 8:43:11 PM

We sold it overseas because we, as business people, are not allowed to keep enough "capital" to purchase. you retain ownership with profit, you sell with a deficit.
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