Mining magnate, Gina Rinehart, will rank as one of Australia’s top three beef producers following the federal government’s approval of her lead role in the $365 million acquisition of S. Kidman and Company.
Her Hancock Beef subsidiary will have a combined herd size of about 300,000 head after its Australian Outback Beef (AOB) joint venture takes control of the 185,000 head Kidman herd.
Hancock Group already owns country in southern Queensland where Mrs Rinehart three years ago planned to build a $500m powdered milk plant, but is now expected to develop the farms for Wagyu cattle and stockfeed production.
A year ago the Hancock Group chairman also bought the 10,000 hectare Glencoe Station in Central West NSW for $30m and paid $25m for nearby “Boogada” and ”Kagan” and their Wagyu cattle herds, then owned by businessman Paul Salteri.
Last year she also paid about $30m for the West Australian Kimberley pastoral gem, “Fossil Downs” and owns a half share in “Liveringa” and “Nerrima” stations in northern WA.
More recently Hancock Prospecting bought “Inverway” and “Riveren” stations June in the Northern Territory’s Victoria River district, and in July, “Phoenix Park” near Katherine, a large-scale export pre-feeding depot and irrigation property.
Mrs Rinehart said she looked forward to working with Kidman’s senior management team and station managers to continue to invest in its beef business.
Kidman and Co chairman, John Crosby, has responded by welcoming Mrs Rinehart and her partner, Shanghai CRED, to the Kidman business, urging her to visit the Adelaide head office in the near future.
The AOB joint venture between Mrs Rinehart’s beef business and China’s Shanghai CRED’s real estate group wants to improve both the production quality and consistency of the Kidman herd.
Mrs Rinehart said the plan was to explore and drive technology and other improvements with a fresh investment strategy for the company’s 10 cattle station aggregations, beef feedlot and stud bull farm.
Investment would begin as soon as AOB’s bid for Kidman received Chinese government approvals granting Shanghai CRED consent to spend the money in Australia.
Mrs Rinehart said the process was well progressed and expected to be finalised “shortly".
“We intend to provide additional investment in cattle and infrastructure, including technology improvements in our efforts to keep cost and quality internationally competitive,” she said.
The AOB takeover would see additional volume going through local downstream processing facilities to package Kidman branded beef products for export.
“Three quarters of this country’s beef production is exported, and export markets are critical for the industry’s future,” Mrs Rinehart said.
She said federal Treasurer Scott Morrison’s approach to the sale of Kidman enabled a local Australian company to “pay a fair market price and retain Kidman in Australian control”.
“The combined Kidman and Hancock herd will reach 300,000 head, placing Hancock in the top three beef producers in Australia,” she said.
“We are excited about the future, and looking forward to getting down to work with the Kidman managers.”
Hancock Prospecting chief executive officer, Garry Korte, described the Kidman deal as “transformational” and a significant step in Mrs Rinehart’s strategy and vision for her cattle business.
“Her long family history in Pilbara stations, affected by drought over many years, as well as, at times, flooding and bushfires, made her appreciate the wisdom of Sir Sidney Kidman’s approach to mitigating the risk with stations spread over different geographic and climatic regions,” he said.
The acquisition structure, which sees AOB buy two thirds of the 10 million hectare Kidman pastoral estate, while South Australia’s Williams Pastoral Holdings buys Anna Creek Station, involved much less foreign investment than any earlier sale proposal.
Mr Korte said it would ensure majority Australian shareholding and control sat in Australian hands, which could become “a more palatable role model” for future foreign ownership deal structures in Australia.
He said the Kidman business would also have access to additional export markets via Shanghai CRED.
Kidman chairman Mr Crosby said directors, management and staff were very pleased the Kidman head office and jobs would remain in Adelaide.
He said the extra investment into Kidman by the Hancock-controlled joint venture had potential to create another 100 jobs in regional communities in the next few years.
“Growth will also give a boost to suppliers and contractors to the beef industry and see additional utilisation of local processing facilities and infrastructure,” he said.