Cattle on Conways Station, south of Darwin

MANY rural property owners appear to have been sold the dream of producing carbon but have been left unsure about how to navigate the way forward.

This week’s property review shines a spotlight on the Northern Territory’s Conways – an example of how carbon can co-exist on an extensive northern cattle station.

Viridios is a global origination, climate solutions and asset management business focused on the growing Voluntary Carbon Market (VCM) and compliance markets.

Geoff Clear and Eddie Listorti

When Viridios’ Melbourne-based general manager Geoff Clear and Sydney-based chief executive Eddie Listorti founded the company in 2019, they each contributed a wealth of commodities markets experience and knowledge of how they operate.

However, they weren’t touching the Australian market to begin with. They focussed their attention on investing in offshore/international voluntary markets, such as Mexico, Mozambique and Papua New Guinea.

That all changed when the market started evolving after the Clean Energy Regulator’s Emissions Reduction Fund stepped back from being the sole buyer.

Earlier this year, Viridios sold its technology arm, Viridios AI, to Bloomberg to focus on the Australian market for climate consultancy and carbon project origination.

Conways

In October 2023, Viridios Capital partnered with Sam Mitchell from Sydney-based Wealthcheck, and paid just over $20 million (WIWO including 4700 head of cattle) for the 139,200ha picturesque Northern Territory Conways Station, east-north-east of Katherine.

The plan was for Mr Mitchell to manage the 5000 head cattle operation and Viridios to concentrate on producing carbon through a Human Induced Regeneration (HIR) project.

However, when Mr Mitchell declared bankruptcy in September last year, Viridios Capital struck a deal to buy Conways outright.

Mr Clear said Viridios didn’t enter into the partnership with the intention of managing the cattle operations.

“We were on Conways to be the carbon farmer. Since taking full ownership, we have learned many lessons, including working with local stakeholders and how to process approvals through government.”

Stratification

Mr Clear said the first and most important task was conducting a full stratification of the property.

“A considerable amount of money was spent on a defined picture of the land and vegetation obtained through satellite imaging.”

“In the past, Landsat, a satellite program used to study the Earth’s environment, was used to produce a 30m-by-30m pixelation which looks like green blobs here and there.”

“Today, the Federal Government has moved to Sentinel-2 that acquires optical imagery at high spatial resolution (10m-by-10m) pixelation, producing a much sharper image.”

Viridios went even further, acquiring Jilin data (capturing 50cm-by-50cm high-definition video imaging, optical and hyperspectral imagery), as well as horizontal scoping conducted by light detection and ranging (LiDAR) to measure distances and create 3D maps.

Mr Clear said the results showed the initial forecast for Australian Carbon Credit Units on Conways was well above what the reality was.

“When we partnered with Sam Mitchell, Conways was forecast to produce around 2.3 million ACCUs. However, a thorough stratification cut that figure in half, finding it could produce 1.47 million tonnes of sequestration potential over the course of 25 years.”

“Because the project on Conways has a 25-year permanence, the sequestration potential is discounted by 25 percent, 1.1 million ACCUs are forecast to be produced over that period. This will be kickstarted later this year after the company conducts its first issuance,” Mr Clear explained.

Despite the lower figure, Mr Clear is confident the ACCUs will still generate a good outcome for Conways.

“Conways is situated in the Roper region, a high rainfall (1000mm+) area, and the regeneration more or less happens in front of our eyes, so we see that as an opportunity to conduct more projects.”

HIR

Conways was one of the first properties to receive HIR consent in the NT, together with the 147,300ha Maryfield on the Barkly Tableland and the 521,883ha Limbunya in the Victoria River District.

However, after just two years of ownership, the extensive grazing assets returned to the market in February 2024 (as part of the Sam Mitchell liquidation) with significant approved carbon projects.

Maryfield was estimated to generate 4.6 million ACCUs over a 25-year crediting period, with a 100-year permanence period and Limbunya was forecast to generate 5.8 million ACCUs over the same time frame.

However, following an expression of interest campaign, the properties were withdrawn from the market, with the carbon projects believed in the development stage.

Benmara

The 451,176ha Benmara, east of Cresswell and Newcastle Waters and 100km west of the Queensland/Northern Territory border, is another NT station that signed up for an HIR project.

The methodology was sunsetted in September 2023 and two years down the track, a delay in the rollout of the Integrated Farm and Land Management (IFLM) methodology (incorporating the old HIR with soil carbon and environmental planning) is preventing project developers from moving forward.

Earlier this year, UK firm Hartree Partners listed Benmara citing uncertainty in the Australian carbon market for the sale.

Purchased for $40m in 2023 by Hartree, together with Sam Mitchell, before taking full ownership of Benmara a year later, the price has now dropped to offers around $35m.

Cattle on Benmara

Carbon potential

Viridios’ Geoff Clear explained the value of a registered carbon project is difficult to determine until a property goes through the process of stratifying its potential.

“Properties close to Conways have registered HIR projects, but the cost and time involved in stratifying them appears to have hindered their progress. Many people have been sold the dream but now they are looking for knowledge about how to expertly navigate the whole carbon industry.”

Mr Clear believes properties with existing, approved HIR projects have potential.

“Assets with untouched registered projects have an opportunity they are leaving on the table. I believe baseline stratification has added significant value to Conways and as a result of our work, there is potential for companies like Viridios to actually bring those projects to the market.”

Mr Clear said while it has been a lengthy process, the company’s efforts, which are starting to bear fruit, could become an industry benchmark.

Partnerships

Mr Clear believes there is a strong case for aggregation between producers and carbon players in the Northern Territory.

However, he admitted a potential conflict can occur between a pastoralist who is running a cattle operation and wanting to get the most out of the land to increase the carrying capacity, versus someone who is trying to manage a carbon project.

“Many station owners are fairly scathing in the way they view those companies because they don’t have any real skin in the game. They may be taking a commission of 25 to 30 percent of the value of the generated carbon, which can be quite a large sum.”

Mr Clear expressed a desire to acquire additional country (close to Conways) and realise the carbon project potential.

“After developing a good relationship with a number of carbon service providers and conducting our own professional assessment, we are confident carbon projects can be replicated across other properties in the Roper region. However, it really comes down to the availability of investor appetite.”

Coming months

In terms of issuing ACCUs, Geoff Clear explained the company can offer prepaid sales due to a defined forecast.

While Viridios is now preparing its first offsets report with the Clean Energy Regulator to issue ACCUs from the Conways Station hosted carbon project, it has been improving the station’s work, health and safety aspects, and looking to improve the herd genetics.