Nationals leader, David Littleproud, says the federal coalition won't hesitate to initiate a Senate inquiry to trawl through the pros and cons of any foreign bid for Australia's biggest fertiliser business.
Although no sale deal has been confirmed, South East Asia's biggest urea fertiliser maker, Pupuk Kalimantan Timur, is widely considered the key player behind moves to take over, or acquire a significant stake in, Incitec Pivot's fertiliser division.
Incitec, which supplies about half eastern Australia's fertiliser demand via 12 distribution sites in four states, had planned to spin off its Incitec Pivot Fertilisers business as a standalone listed entity.
Last month it said it was officially approached about a possible acquisition deal, which analysts tipped to be worth about $1.5 billion.
Incitec said discussions were incomplete and there was no certainty of any sale, but representatives from Indonesia's state-owned Pupuk Kaltim have apparently visited the company's three fertiliser production sites in Queensland and Victoria, and contact has been made with the Foreign Investment Review Board.
Farmers are wary about concentrating control of such a big portion of the local fertiliser market with offshore competitor and also want security of local production maintained.
National interest
Industry body, GrainGrowers, called for additional information about the mooted sale and assurances that Papuk Kaltim's ambitions were in Australia's national interests and farmers would be guaranteed consistent fertiliser supplies.
Similarly, Grain Producers Australia chief executive, Colin Bettles, said farmers expected to be at the forefront of any discussions if a deal was on the table and FIRB investigations were triggered.
He wanted a rigorous process to assess if the mooted sale was contrary to national interests.
Any such deal would be the Albanese government's first big test on the foreign investment front.
Farm sector concerns suggest it may provoke a backlash similar to the contentious 2013 Archer Daniels Midland bid for GrainCorp, eventually blocked by then Treasurer, Joe Hockey.
I'd hope they have already talked to the government - I'd like to hear from Incitec myself
- David Littleproud, Federal Nationals leader
Former Agriculture Minister in the previous Morrison Government, Mr Littleproud, said the Coalition was "watching very closely", hoping Incitec Pivot fully understood the "importance and possible severity of consequences which could flow from this deal".
"I'd hope they have already talked to the government - I'd like to hear from Incitec myself - to share and be upfront to avoid any angst in the farm sector," he said.
"We will, if required, step up the pressure to have any sale thoroughly scrutinised.
"Obviously there will be processes involving FIRB and ACCC investigations which we respect, but if necessary we'll inject ourselves and some parliamentary scrutiny into the discussion.
"It wouldn't be hard to get a Senate inquiry up on this important issue."
In the cropping sector fertiliser typically represents more than a third of farm input costs, and 10pc to 15pc for grazing operations.
"Fertiliser is one of the most critical factors in farm production, which is why, in government, we encouraged development of a diversified local supply base by backing the Perdaman urea project in North West WA with $225m," Mr Littleproud said.
"However, Perdaman won't be producing fertiliser for several years."
Incitec Pivot, which also owns the global Dyno Nobel explosives business, has resisted any comment about speculation that professional due diligence into a potential sale has already begun, or the fate of its fertiliser demerger plans announced almost a year ago.
Pupuk Kaltim is understood to be on an expansion drive, with construction plans to complement the five urea and four ammonia plants it already owns across Indonesia.
It also has 300,000 tonnes of annual nitrogen, phosphate and potash blending capacity over multiple locations and is a regular exporter to Australia.
Australian ties
In fact, Australia and Latin America were growth markets for Pupuk Kaltim last year after global prices soared because urea exports from Russia and China dried up as war broke out in Ukraine.
Incitec Pivot Fertilisers dates its origins back to the Australian Co-operative Fertiliser business formed in southern Queensland in 1915 and Victorian farmer-owned Phosphate Co-operative Company of Australia in 1919, which each absorbing various related rivals before uniting in 2003.
Three years later it bought Southern Cross Fertilisers from BHP Billiton, including Australia's largest ammonium phosphate fertiliser operation at Phosphate Hill east of Mt Isa in Queensland.
Incitec's fertiliser business, which includes an international trading operations, turns over revenue of about $200b a year and generates earnings of about $200 million.
Access to Australian assets and resources must not be allowed to come at the expense of Australian producers
- Rhys Turton, GrainGrowers
GrainGrowers chairman, Rhys Turton, said given it was Australia's largest fertiliser manufacturer and distributor, there was genuine concern about Incitec Pivot product being moved offshore and "impacting our longer-term food security, reducing supply and increasing costs to producers".
He said Pupuk had previously stated a desire to purchase phosphate and potash fertiliser assets, unavailable in Indonesia.
"Access to Australian assets and resources must not be allowed to come at the expense of Australian producers."
Andrew Marshall
Andrew Marshall is the group agribusiness writer for ACM's state agricultural weeklies and websites. He is a former editor at The Land and has worked in various Rural Press group roles in Canberra, North Richmond (NSW) and Toowoomba (Qld).
Andrew Marshall is the group agribusiness writer for ACM's state agricultural weeklies and websites. He is a former editor at The Land and has worked in various Rural Press group roles in Canberra, North Richmond (NSW) and Toowoomba (Qld).
