CANBERRA has given bipartisan support for a new foreign investment deal of up to $700 million to develop irrigated farming, sugar production and ethanol in Western Australia’s remote far north, in addition to $500 million in State and Commonwealth funding.
On Tuesday, the WA government confirmed recent speculation that Chinese company Shanghai Zhongfu had won a competitive tender bid on a 50-year lease to build 15,100 hectares of irrigated farmland in the State’s Ord river region.
Shanghai Zhongfu’s parent company is a major Chinese construction group, Shanghai Zhongfu Real Estate, but its Australian subsidiary Kimberley Agricultural Investment (KAI) will undertake the Ord expansion.
WA Premier Colin Barnett and Regional Development Minister Brendon Grylls announced KAI would lease and develop 13,400 hectares into irrigated farm land under the Ord-East Kimberley Expansion Project.
KAI is proposing to invest up to $700 million over the next six years to establish a sugar industry in Kununurra that’s expected to return 4 million tonnes of cane and 500,000 tonnes of export sugar crystal annually.
The company has indicated it will offer sub-leasing and share-farming partnerships with Australian growers on up to 20 percent of the new farmland.
Another 1700ha of newly developed land in the Ord West Bank area will become available for other producers and crops, creating about 25 new and locally run farms, not limited to sugar production.
KAI’s multi-million dollar investment will also see a sugar mill constructed at an estimated cost of $425 million in the burgeoning northern food bowl.
About 350 local construction jobs and more than 400 operational jobs are anticipated, once full production is achieved by 2021. There is also the potential to build an ethanol plant and a medium density fibre board plant producing up to 300,000 tonnes annually.
An industrial park in Kununurra and major upgrades to Wyndham’s port facilities are also on the cards.
Mr Barnett said the new project was a major step towards the Ord region reaching its full potential. He also acknowledged the Commonwealth government’s “significant investment” of an additional $195 million to build social and community infrastructure in Kununurra, Wyndham and surrounding communities to assist the project.
“This investment in large-scale agricultural industry and downstream processing will be the start of an exciting new era for the East Kimberley and northern Australia,” he said.
“It was the Liberal-National Government’s decision to invest in a new main irrigation supply channel and core transport infrastructure that laid the foundation for the development of a long-term, sustainable agricultural industry in the north of this State.”
Mr Grylls said KAI was one of several companies that registered expressions of interest.
He said the WA Liberal-National Government’s decision to invest $311 million of Royalties for Regions funding into the Ord-East Kimberley Expansion Project had delivered 31kms of new main irrigation supply channel, as well as 40kms of sealed public roads to the land that will be developed into operating farms under this proposal.
Mr Grylls said contract negotiations would be conducted and finalised over the next six months, while KAI must also obtain all relevant approvals and fund associated infrastructure.
The State will retain ownership of the irrigation channel, sealed road and other infrastructure developed under the Royalties for Regions Ord-East Kimberley Project. It’s understood the Chinese company will only pay a peppercorn rent in return for clearing and developing the land.
Federal Agriculture Minister Joe Ludwig said he wasn’t involved in any formal discussions or responsibility in negotiating the Ord deal, but he has spoken to WA Agriculture Minister Terry Redman about the exciting potential for developing farm production in the State’s far north, given access to large, consistent water supplies, quality soils and arable land and favourable growing conditions.
Minister Ludwig said he was cautious around foreign investment that required Foreign Investment Review Board (FIRB) approval but welcomed the Ord announcement.
“I have supported and will continue to support foreign investment that supports jobs, investment opportunity and particularly the transfer of skills, knowledge and research,” he said.
“On face value this deal holds all of those prospects. This is a good investment for Australia.”
The Nationals moved to quell initial criticism when speculation surfaced last week that Shanghai Zhongfu had won the tender bid, ahead of the Australian Agricultural Company (AACo) and others.
Riverina Nationals MP Michael McCormack questioned why taxpayer funds were being used to develop irrigation projects in WA’s Ord river region to assist a foreign owned company, while uncertainty surrounded the Murray-Darling Basin’s future.
But Mr McCormack and other dissenting Nationals were eventually hauled into line after several phone hook-ups explained the difference between Shanghai Zhongfu investing in a green-fields project on leased land, and the stinging criticism which accompanied the federal government’s recent approval to sell Australia’s largest cotton irrigation farm, Cubbie Station, to a Chinese-dominated consortium.