News

Kimberley Meat Co plant heads to sale, as original founder sells stake to ADM

Jon Condon, 24/10/2023

Kimberley Meat Co plant near Broome

WESTERN Australia’s Kimberley Meat Co beef processing plant near Broome will be sold, as part of an ownership change that has taken place this month.

Founder Mervyn Key has sold his 45 percent stake in the plant, together with his share of parent company Yeeda Pastoral Co, to one of his existing partners, ADM Australia.

The deal also includes Yeeda’s two large pastoral assets, Yeeda and Mt Jowlaenga stations near Broome. In March last year, Yeeda Pastoral sold its Springvale group of properties near Broome (Springvale, Mable Downs, Alice Downs and Texas Downs, covering about 600,000ha) to Twiggy Forest’s Harvest Road group.

Finalised only a fortnight ago, the sale agreement means ADM now has an 80pc stake in KMC and Yeeda Pastoral Co. The balance (20pc) is owned by another long-term investor, a family office based in the US and Argentina which has held a stake in Yeeda for close to ten years.

A globally-significant Hong Kong based equity fund, ADM has investments worldwide in agriculture. Its other Australian assets include irrigated tree cropping, stockfeed and commodities trading businesses.

Carbon focus

Yeeda and Kimberley Meat Co was ADM’s first investment in the Australian red meat supply chain. The ADM fund has a strong investment focus on sustainability and carbon, and already has a project on Yeeda Station registered with Australia’s Clean Energy Regulator.

ADM’s objective is clearly to be a large scale Australian cattle producer with a carbon interest, and not a meat processor – and that’s the primary reason for offering the KMC processing asset to the market.

No Foreign Investment Review Board approval was necessary for ADM’s takeover of the Key family’s shareholding, because the Key family investment was already non-resident, based in South Africa.

The sale brings to a close a quarter-century of involvement in the northern Australian cattle and beef industry for the South African-based Key family, which bought into the Yeeda Pastoral Co business back in 2000. Mervyn Key has now stepped down as Yeeda executive chairman.

The Kimberley Meat Co plant was built back in 2017 by Mr Key and his Yeeda partners.

In 2021, KMC’s owners attempted to create a cooperative designed to transfer ownership to local landholders. The WA state government was going to fund the local pastoralists into the deal, but allegedly pulled out at the final stage.

Since then, the sale process had gone on ‘in a lazy fashion,’ Beef Central was told.

Export-licensed KMC is in the late stages of its 2023 season this month, and due to delays after flooding at the start of the year, expects to continue operations until close to Christmas. Total numbers this year will be about 35,000 head, mostly cull cows and bulls used for manufacturing beef, predominantly destined for the US market.

Daily production capacity is around 220 head, with an annual season around 40 weeks a year. The temporary suspension of live export trade with Indonesia assisted with numbers through the plant this year.

In the absence of the mothballed AA Co Livingstone beef plant near Darwin, KMC stands as easily the most northerly, and most isolated beef processing facility in Australia.

Further investment in northern cattle?

Asked whether ADM might consider further expansion in cattle production given its imminent move out of processing, Mervyn Key said ADM was an active investor in agriculture across the world. While not directly answering the question, he said Yeeda was an excellent base to bolt-on further properties in the region, if and when they might become available.

A source close to the sale process said ADM saw its northern Australian focus on cattle and carbon, not on meat processing.

The source said a sale process was already unfolding, with ‘lots of interest’ shown from a number of specifically-targeted domestic and overseas entities. A deal is anticipated some time in the first quarter next year.

The marketing of the asset was described as ‘low-key’, presented to a number of key targets both within Australia and overseas.

With US beef production – especially manufacturing-type beef produced from cull cows – now in a strong cyclical decline, the current timing is close to ideal to try to sell any northern processing asset with a focus on manufacturing beef.

“It’s a ripping asset, and we’ve had lots of interest,” a representing from Perth based corporate advisory firm Poynton Stavrianou, which is handling the sale process told Beef Central.

  • It’s not too late to register investment interest in the KMC asset. To learn more, click here.

 

 

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Comments

  1. Jay Simms, 15/03/2024

    Very remote, but one of only two export works in WA…Transport distances might make it attractive to producers in the west of the NT ?

  2. David Heath, 26/10/2023

    The Springvale aggregate is of course in the East Kimberley, between Halls Creek and Kununurra mailing centres

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