* Shanghai Zhongfu Group wins right to develop Western
Australia farm project
* State says firm plans to invest more than $700 million in
* May build ethanol plant for biofuel, upgrade port
* Foreign investors line up for Australian farms in bid to
secure agricultural resources
(Adds quotes from state government, company and industry,
By Maggie Lu Yueyang
CANBERRA, Nov 20 A Chinese firm has won the
right to develop a farm project in Western Australia, targeting
a $728 million investment to build a sugar industry in the
state, and marking the latest foreign deal aimed at securing
agricultural resources in Australia.
Shanghai Zhongfu Group plans to invest up to A$700 million
($728 million) in the next six years in the 52-sq-mile
(13,400-hectare) area of the Ord East Kimberley region, the
Western Australia state government said on Tuesday.
Zhongfu forecast the project could produce about 4 million
tonnes annually of sugar cane, exporting 500,000 tonnes of raw
sugar, or about 15 percent of Australia's estimated 2012/13
The move comes after a number of high-profile deals
involving Chinese investors, including the purchase of the
country's biggest cotton farm, as well as foreign takeovers in
its deregulated wheat industry.
However, foreign investment in agriculture has sparked a
political backlash that some analysts fear could threaten the
opportunity for Australia to tap the booming demand to
accommodate Asia's middle-class.
"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," Western
Australia premier Colin Barnett said in a statement.
Zhongfu, trading in Australia as Kimberley Agricultural
Investment (KAI), is also proposing to build an A$425 million
sugar mill in the area and could build a biofuel plant as well
as upgrading port facilities in the area.
Despite local scepticism at the prospects for Australia's
farming sector, an increase in offshore interest comes at a time
when returns have seldom been better and adds to other evidence
suggesting the foreign investment may not be mistimed after all.
Helped by generous rains and strong global prices,
Australian farmers may have enjoyed the best year in decades in
OPEN THE NORTH
Australia is the driest inhabited continent, but it has
plenty of water in the tropical and sub-tropical northern
regions such as Kimberley, which are mostly underdeveloped.
The Kimberley project would open new tracts of farmland to
irrigation from the waters of the Ord River and Lake Argyle,
which hold enough water to fill 21 Sydney Harbours.
Zhongfu's president Pui Ngai Wu said investment in a sugar
mill and other infrastructure would depend on further
negotiations with local governments and environmental approvals.
"Scale is important and will directly relate to the level of
investment which KAI will make in infrastructure such as port
upgrades," Wu said in a statement.
The firm's plans could also include building an ethanol
plant, which could produce biofuel from sugar, the state
The Kimberley project is the first investment in Australia
by the Shanghai-based property company, which is still
negotiating rent and will look to start clearing land from 2013.
Australia is the world's third-biggest raw sugar exporter,
with exports forecast to rise by nearly 12 percent from last
year to 3.4 million tonnes.
Global sugar consumption is expected to grow by 32 million
tonnes by 2020, an increase of 2.2 percent a year, driven by
rising population and incomes, according to consultant Jonathan
China is the world's second-largest sugar consumer after
India, accounting for about 8 percent of global output.
Whether for food or ethanol, Zhongfu should be able to
profit from the sugar project, said Stephen Ryan, general
manager of the Australian Cane Farmers Association.
"If you've got cheap rent, plenty of water, plenty of
sunshine...there is every reason that it should succeed," he
Most of Australia's sugar industry is clustered on the east
of the country and previous attempts in the west have faltered
including the closure of a sugar mill operated by South Korea's
largest food maker CJ Cheiljedang.
Peter Robertson, campaign manger for environmental group,
the Wilderness Society, said there were also risks hanging over
"We think it will be unprofitable, and probably will only
last for a couple of years, and then the investors, whoever they
are, will pull out and say it is not viable," he said.
(A$1 = $1.04)
(Additional reporting by Lewa Pardomuan in Singapore, Fayen
Wong and Judy Hua in Beijing; Editing by Ed Davies)