Reuters: Regulatory News: UPDATE 1-Australia approves China-led purchase of giant cotton farm

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UPDATE 1-Australia approves China-led purchase of giant cotton farm Aug 31st 2012, 07:53 Fri Aug 31, 2012 3:53am EDT * Australia approves cotton farm sale to China's Ruyi * Proposed sale subject to conditions * Treasurer Swan says cotton must be sold on open market * Swan says Ruyi must sell down interests to 51 percent By James Grubel CANBERRA, Aug 31 (Reuters) - Australia on Friday approved the purchase by a Chinese-led consortium of a giant cotton farm, a decision certain to inflame the political debate over foreign ownership of farmland. Treasurer Wayne Swan approved the sale, for an undisclosed price, but set several conditions, including forcing the Chinese textile firm leading the purchase, Shandong Ruyi, to sell down its stake in the Cubbie Station property to 51 percent from 80 percent within three years. Swan also said Ruyi's Australian partners, the family-owned Lempriere Pty Ltd, would be responsible for operating the Cubbie Group, including the marketing and sale of its cotton, which must be sold in line with international market practices. Cubbie Station covers almost 1,000 sq km (390 sq miles) of south-western Queensland and has been in administration for three years after racking up more than $300 million in debt during a prolonged drought. Cubbie can grow up to 330,000 bales of cotton in a good year, as well as some wheat, barley, sorghum and corn. The station has entitlements to a massive 537,000 mega litres of water, or enough to fill Sydney Harbour. The water allocations have raised political concerns that the sale to a foreign investor could undermine Australia's chances of reforming water policy, and the sale has drawn anger from lawmakers who wanted the government to block the deal. Ahead of the announcement, independent lawmaker Nick Xenophon called on Swan to block the Cubbie sale to protect the water flows into the Murray-Darling river system, which flows through Australia's food bowl states. "These important environmental assets shouldn't be flogged off to a foreign company that has no connection to Australia, and no obligation to act in our interests," Xenophon said. But Swan said the proposed sale of Cubbie would not have an impact on water management. "The proposed acquisition of Cubbie Group will not impact on water management arrangements as Cubbie Group will remain subject to State and Commonwealth rules and regulations," he said. "If the proposal proceeds, the consortium will be able to actively participate in water markets to sell water access rights that are surplus to business requirements." Link this Share this Digg this Email Reprints

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