The Australian treasury has given its approval to the sale of the country's largest dairy farm Tasmanian Land Company (TLC) including Van Diemen's Land Company (VDL), to Chinese billionaire Lu Xianfeng's Australian arm Moon Lake Investments for $202m.
The move came after the treasury department received recommendation from Foreign Investment Review Board (FIRB).
The department has also laid down conditions for the approval of the sale and Moon Lake needs to comply with the set rules in order to complete the acquisition.
Moon Lake would be required to comply with Australian taxation law, Australian Taxation Office (ATO) directions to provide information in relation to the investment.
Moon Lake would also be required to advise the ATO in case it enters into any transaction with non-residents to which transfer pricing or anti-avoidance measures could apply. Australian Treasury stated that a violation of these conditions could lead to prosecution, fine and potential divestment of the asset.
Australian treasury Scott Morrison said that the deal was approved following a scrutiny of national security, competition, economy and community interests.
Moon Lake has also assured that the current VDL employees would continue in their roles. The Chinese company has also promised to undertake several investment projects in VDL farms which is expected to provide additional economic activity through job creation.
It is expected that the move will guarantee more than 140 local jobs along with an additional investment of more than $100m and 95 new jobs, according to Scott Morrison.
Moon Lake is also planning to continue supply of milk produced at VDL under the contractual terms that are currently in place. This is intended to ensure no adverse impact on the milk supply and milk products supply in Australia.
The Chinese company has also committed to honour the cultural and heritage value of the land on which VDL operates, the Treasury stated.
Tasmanian Land Company has a 30,000 dairy herd across 25 farms and is owned by New Zealand's New Plymouth District Council since 2008.
Van Diemen's Land produces around eight million kilograms of milk solids per year. It operates a dairy support facility and 12,000 heifer herds on a further 5,000 hectares of pasture on its Woolnorth property, the publication reported.
Lu Xianfeng has controlling interest in Moon Lake Investments and is also the founder and largest shareholder of Ningbo Xianfeng New Material, which has a market capitalisation of $1.5bn.
Lu Xianfeng's move is said to be part of a larger strategy to secure food supplies in the Asia-Pacific region.
The move triggered a controversy in Australia and New Zealand where regulators have tightened rules of foreign investment while attempting to remain open to it as it boosts agricultural output and jobs in rural regions, reported The Financial Times.
In 2015, New Zealand turned down a NZ$88m ($US59m) offer by a subsidiary of Shanghai Pengxin to acquire 13,800-hectare Lochinver sheep and cattle station.
A month later, Scott Morrison prevented Chinese buyers, including Shanghai Pengxin, from acquiring S Kidman & Co, citing national security, expecting a local bidder.
Australia began a scrutiny of its foreign investment rules in 2015 after it came to light that the Northern Territory government had leased Darwin port to a Chinese company without undertaking a complete assessment by the Foreign Investment Review Board.
Image: Australian dairy farm to be acquired by Chinese investor. Photo: Courtesy of Detanan/FreeDigitalPhotos.net.
