WA makes Ord risk demand
The WA Government considers the development of two plots of land on the Ord River irrigation scheme so risky that it demanded a $150 million a year guarantee from the Chinese company behind the farming project.
It has also admitted that public perceptions on Chinese investment played into the Ord deal, with Government officials repeatedly using the term “optics” in reference to the issue while negotiating with privately owned Shanghai Zhongfu.
Shanghai Zhongfu agreed to provide the parent guarantee for 50 years as its Australian-registered subsidiary Kimberley Agricultural Investment develops farms on the Goomig and Knox sites, which cover a total of 13,400ha.
The Government wanted the guarantee in place so it can pursue Shanghai Zhongfu for damages in China if anything goes wrong with the Ord project.
The guarantee is on top of a $5 million bank guarantee KAI has in place for Goomig, where the harvest of its first chia crops started last week. A similar guarantee will apply if KAI moves on to the Knox site.
It is understood the Government has not provided Shanghai Zhongfu with a detailed explanation of why it considers the project so risky.
In a written response to questions fromWestBusiness , the Department of Regional Development said: “Risk is related to protection of State-funded infrastructure and environmental compliance related to the development.”
KAI began growing chia, sorghum and millett over about 600ha this year. However, the Chinese are operating under an early access licence almost three years after being named preferred developer of the land. They compare their land tenure to that of a street vendor despite investing $30 million at Goomig.
The Government is reconsidering the value of the parent guarantee and its duration.
“The State expects to issue the development lease as soon as possible, but subject to accepting the parent guarantee and finalisation of legal opinion in China to the State’s satisfaction,” the DRD said.
KAI estimates it will cost $120 million to develop the 6000ha Knox site into farmland.
The Government touted KAI as a billion-dollar investor in a sugar industry based around Kununurra after $311 million of Royalties for Regions funding went into infrastructure associated with the Ord land release.
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