Australia’s largest dairy operation, Tasmania’s historic Van Diemen’s Land Company, is reportedly on the verge of being offloaded by its Chinese businessman owner Xianfeng Lu.
Among his global business investments, mostly in textiles and consumer goods, Mr Lu is the owner of Kresta, one of the world’s largest suppliers of custom-made curtains, blinds, shutters and awnings. His companies’ main products include polymer materials, composite materials, polyester, glass fibre and PVC.
Van Diemen’s Land Co
Established by a group of London merchants in 1825, the Van Diemen’s Land Company ran sheep and beef cattle for 170 years in Tasmania’s far north west, becoming a major producer of wool and beef.
In 1993 it was sold to the New Zealand publicly-listed Tasman Agriculture Limited which decided to turn the property into a dairy enterprise.
In 2008, it was taken over by Taranaki Investment Management Ltd, the investment arm of New Zealand’s New Plymouth District Council.
In 2015, the asset, with around 18,000 milking cows on 25 farms that span more than 7000 hectares near Woolnorth, was listed for sale.
The following year, it was controversially sold for $280 million to Mr Lu’s Moon Lake Investments, which outbid TasFoods’ offer of $250m at the eleventh hour.
Foreign Investment Review Board approval was subsequently granted subject to Moon Lake’s commitment to undertake a number of investment projects on the VDL farms.
According to a statement by the then-treasurer, the Honourable Scott Morrison MP, this “will provide additional economic activity to the Tasmanian economy, and based upon Moon Lake’s estimates will result in a near doubling of employment at VDL. This will guarantee more than 140 local jobs, generate an intended additional investment of over $100 million and an expected additional 95 jobs.”
Plagued by problems
Since the Chinese purchase in 2016, the Van Diemen’s Land Company has been plagued by problems. The sale came during the boom in infant formula milk powder sales to China which saw a number of manufacturing projects emerge in Australia and New Zealand.
The $280m sale price was reportedly lowered to reflect an anticipated reduction in the milk price that year. However, that did not happen, and the New Plymouth District Council will seek to recover that money at a Supreme Court hearing in December.
In April 2018, the five-member board resigned en masse over governance and risk management, and Van Diemen’s Land chief executive officer, Evan Rolley chose not to renew his contract.
In October last year, flags were raised when Rabobank reportedly asked CBRE to value the company. It is understood Mr Lu funded the VDL purchase through debt, with Rabobank apparently lending $70m and two Chinese lenders providing the rest.
If the Van Diemen’s Land Company does come to the market, as suggested by a reliable source who asked not to be named, many claim they will not be surprised.
Daryl Quilliam, the mayor of Tasmania’s Circular Head Council, told Beef Central he would like to see the company sold.
“Since it was formed in 1825, the Van Diemen’s Land business has been held by the British, New Zealanders and the Chinese. It has never been held by Australians. It would be great to see an Australian buyer again purchase the holding,” he said.
Mr Quilliam said while the company has achieved some of its promises, many undertakings had not been fulfilled.