July 26, 2016

Australia’s Hancock Prospecting has acquired the Inverway and Riveren cattle stations in the Northern Territory from Indonesia’s Japfa Santori as the mining giant continues to diversify into agriculture.

The purchase price was not disclosed, however, in April it was reported that Australia’s Archipelago Beef Trust was set to acquire the stations for $60 million – a deal that did not materialize.

“This builds on Hancock’s previous cattle investments,” said Hancock in a statement. Adding that the group “was able to move quickly and decisively to acquire these high-quality cattle stations after a previously announced transaction with other parties did not proceed.”

The two stations encompass 550,000 hectares of land and a combined herd of 40,000 head of cattle, and will be added to Hancock’s existing pastoral portfolio, which includes the Fossil Downs, Liveringa, and Nerrima stations across Western Australia, and other smaller properties in Queensland and New South Wales.

The stations were acquired from the Underwood family by Japfa Santori in a high-profile deal in 2013 after cattle prices had been falling for five years and cattle permits for export to Indonesia had been cut. At the time Mr. Underwood said, “It’s a straight profitability problem at the moment.”

However, in the past three years, Australia has exported record volumes of beef to China, and last year, secured a deal to sell live cattle onto the Chinese market. Furthermore, Australia’s Ministry of Agriculture released 250,000 permits for live cattle exports to Indonesia in May of this year. These developments along with the finalization of the China-Australia Free Trade Agreement (CHAFTA) have created a promising landscape for Australia’s mining magnates, such as Hancock’s Chairman Gina Rinehart and others, to diversify into agriculture as a means to capitalize on Asia’s rapidly growing food market and Australia’s so-called “dining boom.”

“I am very excited about the acquisition of these two cattle properties and to be investing in Australia, particularly in the Northern Territory,” Rinehart told Western Australian newspapers. “I am passionate about our agricultural industry and developing northern Australia.”

For Hancock, the purchase of the stations will likely be the foundation for an expansion up the value chain.

“We plan to invest further to grow our herd numbers on Hancock cattle stations…” said Hancock Prosecting chief executive Gary Korte, “…and are just beginning to develop the 2GR beef brand to capture additional value through distribution networks in markets that value our clean green Australian food products.”

—

Lynda Kiernan