Mining and beef billionaire, Gina Rinehart’s agribusiness expansion moves continue at pace as two new deals propose live export supply chain co-operation with China’s Zhejiang Aozhou Cattle Industry Company.
The plans, which are non-binding at this stage, propose a 150,000 head a year capacity feedlot and abattoir for cattle imports on Jintang Island, near the big southern port city, Ningbo.
The Jintang operation will be jointly owned by several major Chinese investors, with Mrs Rinehart’s Hancock empire also taking a share.
The size of that stake is still to be determined, as is a likely start date for exports.
Jintang Island is likely to provide the sort of quarantine buffer which could avoid breaking Chinese import protocols relating to bluetongue virus found in varying parts of northern Australia’s grazing country.
Until now live export beef cattle shipments to China have been limited to stock from bluetongue-free southern Australia.
According to Chinese partners in the deal, it involves developing a “geographical, industrial and market advantage” based on the “Sino Australia modern industrial park” in the Zhoushan harbour prefecture, just south of Shanghai.
Cattle will mostly be shipped from Darwin, and Broome and Derby in northern Western Australia.
The plan is for a new joint venture exporter, majority owned by Hancock, to source stock primarily from Hancock’s pastoral stations in northern Australia.
Hancock chief executive officer, Garry Korte, in China late last week signing the heads of agreement, said Hancock and its partners were “committed to growing more integrated and efficient supply chains and continuing to supply into multiple distribution channels”.
“We cannot overlook that China is an important market, with an increasing demand for high quality protein," he said.
The Australian Live Export Council (ALEC) applauded the “significant progress” made developing Hancock’s live cattle supply chains and export partnerships.
“The strengthening of commercial partnerships, such as those forged between Chinese interests and Hancock, certainly add momentum to the work by industry and government to iron-out the export protocol and allow a greater flow of feeder and slaughter cattle to China, including from Australia’s northern ports,” ALEC noted in a statement.
“This agreement is another vote of confidence in our livestock export industry.”
The Chinese lot feeding operation is likely to have potential to expand to 300,000 head/year.
Hancock’s pastoral portfolio now ranks as Australia’s third biggest beef producer, with about 300,000 head, following a run of pastoral and herd acquisitions in the past two years.
It includes a majority stake in the big Kidman and Company business where stocking rates are now expanding.
Hancock intends to divert suitable cattle from its existing live export markets into the Jintang feedlot and processing operation.
Any shortfalls in supply from Hancock or Kidman properties in the north would be filled with stock bought from other Top End suppliers.
The China partners
The Zhejiang Aozhou Cattle Industry Company (Aozhou) is already jointly owned by the China’s big New Hope Group, Chinese asset manager, Harvest Fund, and the Zhejiang Seaport Group.
New Hope has been a keen importer and investor in Australian agribusiness, particularly dairy and meat processing.
New Hope group chairman, Yonghao Liu, supported Mr Korte’s comments about Chinese demand for premium protein.
Under the China Australia Free Trade Agreement (CHAFTA) the approval of live cattle exports relied on leading agricultural enterprises from the two countries forming a strategic co-operation initiative, he said.
“This will not only promote the development of the industry, but also provide a larger quantity of premium protein products, benefiting the long‐term prosperity of all the businesses along the supply chain.”
Mrs Rinehart also welcomed more exposure to end‐user markets.
“Currently Australia needs to export two thirds of its cattle, so overseas markets must continue to be developed if we are to grow our cattle industry,” she said.
“Growing our cattle industry helps the many related industries, not just the stations themselves, but also the trough and tank suppliers, the hydraulic crush makers, contractors, truckers, accountants and other consultants, and more."
“This industry has the opportunity to co-operate and develop sustainable long‐term growth into export markets to achieve a better future for our beef and related industries, and contribute significantly to Australian jobs and Australians’ living standards.”
Varied market options
The Hancock-Aozhou plan does not envisage sourcing cattle from Kidman and Co’s southern stations.
Hancock officials said they wanted to grow all aspects of the company’s beef interests via multiple market channels, including locally processing southern Kidman cattle and Hancock pastoral’s fullblood Wagyu herd which supplies the newly launched 2GR brand.
The Wagyu brand is processed in southern Queensland at the John Dee plant in Warwick.
Hancock has also insisted none of its Australian pastoral stations will be sold to the Chinese joint venture as part of the partnership.
In Australia, only the new export operation and local quarantine feedlots would have 33.3pc ownership by the China-based Aozhou partnership, which would first require Foreign Investment Review Board approval.
Some Chinese government approvals for both partnerships would also be required.
However, Hancock executive director, Tad Watroba, was confident of government regulatory support.
He said having exporter and importer working together to boost the efficiency and profitability of the supply chain was exactly what was envisaged by CHAFTA and it would deliver recurring benefits for both countries.
Chinese operations would be conducted to the highest animal welfare standards, including stringent compliance with the Exporter Supply Chain Assurance System (ESCAS).