IN A surprise decision this morning Federal treasurer Scott Morrison has vetoed the sale of Australia’s largest land holding, S Kidman & Co, to Chinese buyers.
The decision follows a recommendation against the sale by the Foreign Investment Review Board.
“I have decided that the acquisition by foreign investors of S. Kidman and Co. Limited would be contrary to the national interest and shall not be authorising the sale to proceed as currently proposed,” Mr Morrison said in a statement this morning.
Kidman is Australia’s largest private land owner and holds approximately 1.3 percent of Australia’s total land area, and 2.5 percent of Australia’s agricultural land.
The company has 10 cattle stations, including properties across regional South Australia, Western Australia, the Northern Territory and Queensland covering 101,411sq km and managing a long-term average herd of 185,000 cattle. This is a significantly larger than the next biggest rural landholding in the country.
One of Kidman’s stations, Anna Creek, is also the largest single property holding in Australia. Importantly, around 50 per cent of the Anna Creek pastoral lease is located in the Woomera Prohibited Area (WPA) in South Australia.
National security concerns played a role in the decision, Mr Morrison said.
The nearby WPA weapons testing range makes a unique and sensitive contribution to Australia’s national defence, he said, adding that it was “not unusual for governments to restrict access to sensitive areas on national security grounds”.
“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,” Mr Morrison said.
“I note that following communication of my decision all bidders to acquire S. Kidman and Co. Limited have elected to withdraw their FIRB applications prior to my Final Order being formalised.
“It is now a matter for the vendor to consider how they wish to proceed with offering the composite interests of S. Kidman and Co for sale. I will consider any such future alternate proposal or set of proposals on its merits, consistent with my obligation to ensure that, any such sale is on terms that are not contrary to the national interest.”
Mr Morrison said Australia welcomed foreign investment “where it is consistent with Australia’s national interests.”
“Foreign investment has underpinned the development of our nation and we must continue to attract the strong inflows of foreign capital that our economy requires. Without it, Australia’s output, employment and standard of living would all be lower,” he said.
“Foreign investment rules facilitate such investment while giving assurance to the community that the investment is being made in a way which ensures that Australia’s national interest is protected.
“Under the Foreign Acquisitions and Takeovers Act 1975, all foreign investment applications are examined against Australia’s national interest.
“This test includes a range of factors including: the impact of the proposal on the Australian economy and community; national security; consistency with other government policies including tax; competition; and the character of the investor,” Mr Morrison said.
“We will continue to welcome and support foreign investment that is not contrary to our national interest.”
Two Chinese companies, the Genius Link Group and Shanghai Pengxin, have reportedly made offers worth over $350 million each for the vast cattle enterprise.
In a significant parallel, the New Zealand Goverment recently rejected a Chinese bid for one of the country’s largest grazing landholdings, after it was earlier passed by the country’s equivalent of the FIRB. Click here to view Beef Central’s article on the sale of NZ’s Lochinver Station to an NZ domestic buyer.
Kidman & Co issues statement
Kidman & Co issued the following statement this morning following Mr Morrison’s decision:
Kidman & Co has been advised that the Commonwealth Treasurer has indicated that the acquisition by foreign investors of S.Kidman & Co would be contrary to the national interest and will not be authorising the sale to proceed as currently proposed.
The FIRB, through the Treasurer, cited concerns over the portion of Anna Creek Station within the occasional use “green zone” of the Woomera Prohibited Area, and further concerns over the land area within the Kidman portfolio of remote arid zone properties. Kidman & Co acknowledges the Government’s concerns and will seek clarity around those concerns and the deal parameters, so that stakeholders can continue to work with the Government in good faith to reach a satisfactory outcome.