Merino sheep awaiting shearing on Rawlinna Station in WA

CORPORATE-scale northern beef producer Consolidated Pastoral Co is spreading its commodity risk with a major acquisition in the sheep industry, agreeing to terms to purchase Jumbuck Pastoral Co’s enormous Rawlinna Station in Western Australia.

At 10,117sq km, Rawlinna is regarded as Australia’s largest sheep property, recently running around 60,000 Merinos, and with a working capacity of around 80,000 head.

The property, pictured above, is located near Rawlinna, 400km east of Kalgoorlie in the Goldfields-Esperance region of WA.

The parties have entered into a sale and purchase agreement this week, conditional on CPC receiving Foreign Investment Review Board approval. The Western Australian government must also approve the transfer of the pastoral lease. Apart from that, the sale is unconditional.

Rawlinna is being sold on a going concern, walk-in, walk-out, including the sheep flock. An accurate head count is currently taking place. Current employees will be offered ongoing roles with CPC.

CPC’s major shareholder, UK investor Guy Hands, is no stranger to sheep, until recent times running one of the largest flocks in the United Kingdom.

CPC itself was once a substantial wool producer, running a flock of up to 100,000 Merinos at the company’s Isis Downs headquarters near Blackall in Central Western Queensland until well into the 1990s. Sheep were gradually replaced by cattle on Isis, which today runs about 31,000 cattle plus 45,000 goats on secondary country.

Rawlinna is a combination of saltbush, bluebush and open plains – all dead-flat – and well developed for efficient large scale Merino sheep production.

The deal came after an expressions of interest sale process conducted by Elders, and followed an earlier failed attempt to sell the property to Twiggy Forest’s Fortescue Metals last year (see details below).

No sale price will be disclosed.

CPC chief executive Troy Setter said the acquisition of Rawlinna would see CPC return to large-scale sheep and wool production after a 25-year absence.

“It’s not every day that a large-scale, high quality sheep station comes on the market,” Mr Setter said. “Rawlinna has never before been sold, but we believe now is a good time to invest in Australia’s sheep and wool industry.”

“Rawlinna represents an opportunity for us to re-enter the Australian sheep production space at scale and accelerate our ambition of building-out a quality diversified agricultural portfolio by both geography and production type,” he said.

CPC now has assets in cattle, goats, sheep and wool production, natural capital and more than 20,000ha hectares of cropping capacity, in northern Australia and Queensland. It also operates two modern beef feedlots in Indonesia, both of which are much more material than what they were ten years ago.

The purchase represents CPC’s first investment in the WA pastoral industry since divesting its Kimberley assets including Carlton Hill around 2016. It still holds a long-term sub-lease on Carlton Hill.

There was no intention of converting Rawlinna away from sheep production, Mr Setter said, and it would remain a stand-alone business within the CPC portfolio.

“We will aim to build on the legacy of Jumbuck Pastoral by further developing Rawlinna to increase its sheep and wool production capacity in the years to come,” he said.

Asked by Beef Central if there was more wool production investments in the wind, Mr Setter simply said CPC “would see how it goes.” He rejected any notion that  lack of confidence in the WA sheep industry following the live export decision was a factor in the sale. However Rawlinna represents one of the few large-scale WA sheep transaction since the live export closure announcement.

Vendor, Jumbuck Pastoral, is one of Australia’s largest sheep and cattle producers with properties in South Australia, New South Wales, Western Australia and the Northern Territory, including the 1.25m/ha Wave Hill and Cattle Creek Stations.

Jumbuck’s Jock MacLachlan said Rawlinna occupied an important space in his family’s history.

We are delighted that it will be passed to a custodian the caliber of CPC, with a strong record of sustained investment in our industry and whose owner takes a multi-generational view. We look forward to seeing CPC invest in the next stage of Rawlinna’s development and the career opportunities that will be provided to the Rawlinna management team,” he said.

Previous deal fell through

In April last year, Jumbuck announced plans to divest Rawlinna as part of a family succession planning project.

Mr MacLachlan told Beef Central at the time that the company had no intention to sell any other assets, but would continue to look at opportunities to further grow and diversify the portfolio moving forward.

Jumbuck went close to selling Rawlinna Station last May to Andrew Forrest’s Fortescue Metals Group, but the deal fell over after the WA Lands Department did not approve the sale.

Mr Forrest was named as the buyer of Rawlinna at the time, and subsequently announced plans to assess the potential for future green energy and carbon reduction projects, while continuing to run a commercial flock. It is understood the WA government’s failure to grant ministerial approval was the reason behind Fortescue’s withdrawal.

Tom Russo

Elders executive general manager Tom Russo said the current Rawlinna sale process drew significant interest from the market, including large sheep production enterprises from both the east and west coast, new entrants and international investors.

“It was excellent to see the confidence in the industry,” he said.

Hugh MacLachlan first placed a survey peg in the ground on Rawlinna during the 1960s and through meticulous planning and substantial investment, the property was established. It is now the largest sheep station in Australia, occupying 1,046,323ha and is widely regarded as an excellent example of planning and land management.

The property features a boundary exclusion fence that spans some 400km.

“The portfolio of agricultural assets that has been acquired by Jumbuck over many years of sustained investment is truly extraordinary,” Elders’ Tom Russo said.

“While the divestment of Rawlinna constitutes a significant sale, in the context of their overall portfolio, this is merely a refinement to better align the asset base with Jumbuck’s strategy moving into the future. Jumbuck’s intention is to continue to invest in the improvement and growth of their proudly Australian family owned agricultural enterprise.”

CPC owns and operates a portfolio of nine station aggregations in Australia and two feedlots in Indonesia. Across more than 3.2m ha of land, CPC manages more than 300,000 cattle, 45,000 goats and produce a diverse range of crops. With an asset base in excess of $1.2 billion, CPC supplies a variety of domestic and international customers.