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26-10-2015, 10:40 PM
This is interesting. It's biggest customer is now trying to get a piece of its meat. Will pragmatism prevail or protectionism kick in?
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China eyes Aussie infrastructure deals
China eyes Aussie infrastructure deals
China eyes Aussie infrastructure deals
26-10-2015, 10:44 PM
27-10-2015, 08:11 PM
China buys 45pc stake in Bindaree Beef for $140 million
[Image: 976101-f196bec2-7c51-11e5-9d9b-7b73a423a28f.jpg] John McDonald, owner of Bindaree Beef in Inverell with his daughter Leigh BelbeckSource: News Corp Australia [b]One of China’s largest meat processors has taken a 45 per cent stake in the Bindaree Beef Group.[/b] Shandong Delisi Food Co will pay $140 million for the stake in Bindaree, which has been seeking a partner to help it expand so it can supply premium beef markets in Asia, Australia and elsewhere. The Delisi-Bindaree transaction — which is subject to Foreign Investment Review Board approval — is one of the first major deals to be announced since the signing of the China-Australia free trade agreement in June. Bindaree is one of Australia’s largest meat processors, with an abattoir at Inverell in northern NSW which can process 1300 cattle per day and employs more than 600 people. Pork processor Shandong Delisi is listed on China’s Shenzen Stock Exchange with a market capitalisation of about $1 billion. “Delisi’s deep expertise in meat sales and processing, their premium and trusted brands and established distribution channels open up new avenues for BBG to leverage China’s growing appetite for beef protein,” BBG chairman JR McDonald said today. Bindaree said Delisi’s sales network reached 700 million people in China.
09-11-2015, 09:48 PM
Agribusinesses going to foreigners with ‘patient capital’
Kylar Loussikian [Image: kylar_loussikian.png] Journalist Sydney [Image: 371036-06fbe2ee-86a0-11e5-ad69-bbb228b5cdff.jpg] It is very difficult to attract large-scale investment in agriculture from the domestic market. Picture: Matt Turner.Source: News Corp Australia [b]Large-scale agricultural investments in Australia will “almost invariably” go to foreign buyers despite outperforming other investment classes over the long term, according to the executive director of the Australian Farm Institute.[/b] It is a sentiment echoed by the National Farmers’ Federation’s chief executive Simon Talbot, who said Australian consumers and institutional investors did not have the same “patient capital” as Singaporean, Chinese and other overseas buyers. Mr Talbot’s comments, and those from the AFI’s executive director Mick Keogh, come as the sale process for the S. Kidman & Co pastoral company, worth about $325 million, nears its end, with all but a few Chinese buyers out of the running. Chinese conglomerate Shanghai Pengxin, through its Hunan Dakang Pasture Farming subsidiary, is believed to be the closest to securing the sale, while Guangzhou-based Donlinks Grain and Oil Company remains in the process. Pengxin has also considered an investment in the Terra Firma-owned Consolidated Pastoral Company, a business which itself had looking at buying the Kidman empire with the backing of its British private equity parent. However, the Queensland Investment Corporation, with $72 billion in funds under management, is firming as a favourite to buy CPC, which is worth as much as $735m, with Queensland Treasurer Curtis Pitt on Friday announcing the fund was evaluating new opportunities in the agriculture industry. “The QIC agribusiness strategy is about growing the beef industry to meet new Asian demand,” Mr Pitt said. “Meat exports are one of the Queensland economy’s great strengths … QIC’s agribusiness strategy provides opportunities for Australian and overseas investors to buy into this growth story.” Interest for the Kidman assets, 11 million hectares of land including the world’s largest cattle property, Anna Creek Station, in South Australia, have largely been confined to overseas buyers. The Australian reported early interest from Ningbo Xianfeng — best known for its ownership of blind manufacturer Kresta Holdings — in July, along with Riga Australia, a division of Zhejiang. Others thought to have been interested included the Hewitt Cattle Company, backed by funds from Canada’s Public Sector Pension Investment Board, and FK Gardner & Sons. Mr Keogh said recent history had shown, through the $300m sale of Cubbie Station — owned by Lempriere and Shandong RuYi Group — and the Shanghai Zhongfu-owned East Kimberely assets, that it was very difficult to attract the large scale investment in agriculture from the domestic market in Australia. “A significant part of the reason is that fund managers in Australia typically have a much shorter-term focus, they are worried about the quarterly superannuation tables and have reward structures linked to those, whereas agriculture is typically a pretty long-term investment,” Mr Keogh said. Superannuation funds returned between 4.5 per cent and 5 per cent per year, while agricultural returns where higher over a 10-year period, but without the steady returns, he said. Mr Talbot said Australian investors did not understand the listed agriculture companies, and said more agriculture-oriented managed funds were needed. “We regularly speak to people on Collins Street (in Melbourne), the smartest investors in the country, and they are looking for a solution to be brought to them ... an agricultural investment is frankly not going to fall into their lap.”
18-11-2015, 05:49 PM
Largest homegrown pipeline co also no matched for Chinese backed co...
Top End pipeline project welcomed
Annabel Hepworth [Image: annabel_hepworth.png] National Business Correspondent Sydney Amos Aikman [Image: amos_aikman.png] Northern Correspondent Darwin [Image: 970387-3cb0107c-8d08-11e5-9723-3086fd960cea.jpg] Jemena will develop the $800 million pipeline. Source: Getty Images [b]Industry has cautiously welcomed progress on the plan to connect the northern and eastern gas markets after the Northern Territory government picked Asian-owned Jemena to build the $800 million pipeline that has the potential to transform Australia’s gas sector.[/b] The government announced Jemena, owned by the State Grid Corporation of China and Singapore Power, would develop the pipeline, eschewing short-listed rivals including the local APA Group. As part of the deal, explosives and fertilisers giant Incitec Pivot — which has long sounded the alarm about a looming gas crunch — has struck a 10-year supply agreement for gas to the Phosphate Hill manufacturing plant in northwest Queensland. “The supply of gas has been just about the biggest strategic issue facing the board of Incitec,” said chairman Paul Basher. Industry said that getting more gas into eastern Australia should help users struggling with high prices, with Manufacturing Australia executive director Ben Eade saying the project was “one piece of the jigsaw” to fix some of the problems “plaguing” the gas market. Late yesterday, Australian Industry Group chief executive Innes Willox said the project was valuable, but that an alternative, significantly more expensive southern route would have offered “greater prospects to boost competition and ease supply risks”. Jemena managing director Paul Adams said that gas from the pipeline, which will link Tennant Creek in the Territory to Mount Isa in Queensland, was expected to flow to east coast gas markets from 2018. Mr Adams said the 623km pipeline would provide a foundation for a more robust Australian gas market. “What I’m seeing is gas markets beholden to one supplier and one processing point,” Mr Adams said. “At the moment there’s really only one hub, which is Moomba, and this will offer two hubs to the east coast gas market.” Business Council of Australia chief executive Jennifer Westacott said the North East Gas Interconnector (NEGI) could “support greater interconnection and liquidity within Australia’s gas markets”. Ms Westacott said the government had been innovative in unlocking private sector capital “without compromising government balance sheets” after NT Chief Minister Adam Giles said the project would not need taxpayer underwriting. Mr Giles said the development was another step towards a truly national gas grid. Ms Westacott said that while the pipeline would make a “strong contribution” to Australian gas market supplies, “it remains important that NSW and Victoria remove barriers to the further development of onshore gas reserves in their states”. Central Petroleum managing director Richard Cottee said the national gas market was facing a “severe imbalance” over the next few years as liquefied natural gas projects ramped up, and gas from the Northern Territory should help offset that. But Mr Willox warned there was “deep uncertainty about the future of the market and the role of national considerations” in the decision to select the northern route. He said that “we do not know if gas users, and Australia as a whole, would have been better off with the southern route to Moomba.” APA managing director Mick McCormack said his company had gone as far as it could on the bid. “Our bid terms pushed the risk/return equation as far as we possibly could,” he said.
18-11-2015, 10:21 PM
Chinese developer R&F Properties plans $500m sites acquisition
[Image: turi_condon.png] Property Editor Sydney [Image: 434590-1677f284-8c0a-11e5-b541-1da9b482b80f.jpg] Vincent Chen, deputy general manager of R&F Properties. Source: News Corp Australia [b]Guangzhou-based R&F Properties plans to spend $500 million acquiring sites in Australia over the next five years, continuing its development push outside of China, according to deputy general manager Vincent Chen.[/b] The group which has a listed arm in Hong Kong with a market value of $4.7 billion, has amassed four sites in Brisbane and Melbourne, last week launching a $400m apartment complex at South Brisbane. Brisbane 1, a 30-level project of 600 apartments, is R&F Properties’ first venture in the Australian development market. “While we have plans to expand into other capital cities, Brisbane is our current focus as a booming city with robust potential for population growth and development,” he said. “We will continue to invest in development in Brisbane as it evolves towards New World City status.” R&F made a dramatic entry into the Australian market last year when it bought two approved sites from Brisbane-based Metro Property Development paying $45m, almost double what the local company had spent less than a year earlier. Marketing began on the project through CBRE last week at a starting price of $345,000 for a one-bedroom unit with three-bedroom apartments priced around $1.14m. R&F, which has completed shopping centres, office buildings and five star hotels in China including a Ritz Carlton, Grand Hyatt and Park Hyatt’s in Guangzhou, says it has plans to expand outside of China and has also flagged Malaysia as a destination. In 2013, its Hong Kong-listed company paid 4.5 billion ringgit ($1.4bn) for six commercial and residential sites totalling 47ha in the Malaysian state of Johor Bahru in its first acquisition abroad. In Australia, in addition to the South Brisbane property, it has purchased two other sites in the city and one in Melbourne which are included in the $500m acquistion target. Earlier this month R&F Properties submitted plans for a 1400-apartment project on the Kinnears Ropeworks site in Melbourne’s Footscray. The group last year bought the 3.3ha parcel for $60m from Richard Gu’s AXF Group in a deal brokered by CBRE. If approved it would be one of Melbourne’s largest apartment projects, with the designs being undertaken by Elenberg Fraser. The apartments will be spread across eight buildings ranging from five to 18 storeys. Mr Chen said R&F hoped to release further details on the project early next year. Tourism and population growth made Australia attactive, Mr Chen noted.
20-11-2015, 08:22 AM
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by Tony Boyd The political backlash against Chinese investment in infrastructure and rural businesses has not dampened the enthusiasm of State Grid Corporation of China to own the $8 billion Transgrid poles and wires in NSW. The Chinese are sticking with their commercial imperative to acquire stable, long term assets amid mounting opposition to their involvement in sensitive sectors of the economy. Anti-Chinese moves include the ban on the sale of S. Kidman & Co's cattle stations to Chinese investors because it is against the national interest, the backlash against the Chinese purchase of the Port of Darwin, the toughening of the foreign investment rules for investment or reinvestment in the food processing industry and the re-regulation of the sugar milling industry in Queensland. Several of these moves are being driven by the Nationals. That has the potential to create problems for the federal trade and investment minister Andrew Robb as he tours Asia looking for investment in northern Australia. NSW Premier Mike Baird must be concerned about what the Chinese think about Australia's apparent xenophobia given that he is trying to sell more than $20 billion in electricity assets. At this stage, with only four days to go before bids close for the $8 billion Transgrid transmission network, there is no sign that the Chinese are backing off from further investment. The word going around NSW political and banking circles is that the Chinese are like a bull at a gate. In an unusual twist which has rarely, if ever, been seen in a consortium involving Macquarie Group, the bankers from the silver donut are not the most aggressive ones in the deal. Normally Macquarie pushes the hardest to win infrastructure assets. It backs this up with its own balance sheet and, on some occasions, its own infrastructure funds. This strategy works well because balance sheet-funded assets can be flipped to bidders who lose the race to win the assets while the assets bought by Macquarie managed infrastructure funds are usually locked up for years. State Grid Corp of China is said to be so keen to get its hands on one or more of the assets being sold by Baird that it is putting the normal Macquarie aggression in the shade. It is believed the bidding for Transgrid will be hotly contested. There are unlikely to be any surprises in relation to Chinese ownership should they win because the process has involved close contact with the Foreign Investment Review board. Electricity transmission assets are valued in relation to the regulated asset base (RAB). In the case of Transgrid the RAB is $6.4 billion. A multiple of 1.2 times or 1.3 times RAB would not be surprising. However, in this case there could well be a winner's curse. The regulator is far more vigilant about the operating efficiency of networks and there is less opportunity to game the system as has happened in the past. Baird is moving as fast as he can to get cash in the door and recycle the money into other infrastructure assets. He is expected to call for expressions of interest for the $20 billion Ausgrid poles and wires within a week of closing offers for Transgrid. State Grid Corp of China has a long history of buying and operating electricity assets in Australia. But it must wonder about the rapidly changing attitude toward foreign investment in Australia. The Chinese only need look towards the federal parliament to see evidence of opposition to foreign investment. The Foreign Acquisitions and Takeovers Legislation Amendment Bill before parliament will force FIRB to screen all investments in agribusiness worth more than $55 million. In Queensland, the Katter Party's private members bill to re-regulate the sugar industry is due for debate early next month. It is looking increasingly likely that the bill will be passed by the Queensland parliament with the support of the LNP. There is internal friction in the LNP with the Liberals opposed to re-regulation and the Nationals all in favour of it. The sugar industry in Queensland was de-regulated about five years ago at a cost to taxpayers of $444 million. Katter's legislation is aimed squarely at the three foreign owned sugar millers in the state - Wilmar International, China's COFCO and Thailand's Mitr Phol Sugar Group. They will be forced to provide growers with a choice as to who sells two-thirds of all sugar produced by the mills. There will naturally be a flow on effect if the industry's long standing milling arrangements are changed. It would not surprise if investment in the mill infrastructure dries up because there will be no financial incentive to maximise the output from the mills. Canegrowers like the idea of moving to pre-contract arbitration. But that might just lead to the courts being clogged up with cases.
21-11-2015, 11:33 PM
Defence and intelligence officials are set to advise the Turnbull and Baird Governments there is "no way" they can accept a Chinese bid in the massive $9.8 billion sale of the NSW electricity grid. Amid escalating controversy over the sale of the Port of Darwin to Chinese interests and growing tensions over Chinese investments in strategic assets, the advice threatens to leave Prime Minister Malcolm Turnbull in an uncomfortable position with China. The frontrunner for the NSW government's sell off of TransGrid – with final bids due in on Monday – is a consortium comprising Macquarie Bank and the State Grid Corporation of China which already has extensive holdings of electricity and gas infrastructure assets in Australia. However, intelligence officials have expressed alarm about the bid because TransGrid owns the NSW electricity grid and fibre optic cable networks in NSW and the ACT. The data cables service defence bases and defence intelligence centres. Even as Department of Defence secretary Dennis Richardson this week spearheaded the defence of intelligence advice that there were no security implications in the $506 million, 99-year lease of the Port of Darwin to Landbridge Corporation, intelligence officials were making clear that their view of the NSW electricity grid was very different and not in anyway benign. One senior source said there was "no way that's going to happen". FIRB OPTING OUT? However investment banking sources claimed late on Friday that the Foreign Investment Review Board had indicated to bidders on Thursday that it was not going to take sides in the bidding process, leaving conflicting signals about the federal response. The NSW grid sale now threatens to escalate tensions between Australia and China over investment, as well as create chaos in the NSW electricity privatisation bidding process.Treasurer Scott Morrison announced this week he had knocked back bids by Chinese and foreign governments for S. Kidman & Co. The company's holdings include Australia's largest cattle station, Anna Creek, located near the Woomera weapons testing range in outback SA. Wang Zenyu, an associate research fellow at the China Institute of International Studies which sits under the Foreign Ministry, said Australia was "discriminating" against Chinese investors. "Chinese investors have complained for a long time about being treated differently to US or Canadian investors," he said via phone from Beijing. "This is discrimination for sure." Mr Wang said Canberra was using national security as a "convenient excuse to block Chinese investment." It is believed the NSW Government declined early advice to put foreign ownership caps on bidders to stave off complications such as those now emerging, opting instead to rely on advice from Canberra. The Australian Financial Review reported earlier this month that the state government was confident concerns about a Chinese stakeholding in the bid could be dealt with through strict ownership and management requirements. But this is looking increasingly unlikely. EMBARRASSED IN DARWIN There are three other groups bidding for the electricity grid: a consortium led by Australian Super, and including Canadian and Middle Eastern interests; a consortium led by Spark Infrastructure and Kuwaiti interests; and Hastings Funds Management. Earlier this year, State Grid opted to make a full bid for TransGrid with Macquarie Bank, rather than seek a smaller stakeholding via a bid through a company which owns part of the Victorian electricity grid, AusNet, in which State Grid has a 20 per cent interest. Mr Turnbull was embarrassed during a brief visit to Darwin on Friday when he echoed Mr Richardson's advice that the commercial port was not used by naval vessels. Questioned on Darwin radio about the sale, Mr Turnbull said "the port that is being leased is not being used by the military, right, it is a commercial port". But according to an announcement by the Darwin Port Corporation, the lease includes East Arm Wharf commercial port outside Darwin and the Fort Hill Wharf close to the city's CBD. Fort Hill Wharf is advertised as a "cruise ship and defence vessel facility". Darwin Port Corporation's website promotes the fort as catering to "frequent naval ship visits" for visiting international and domestic naval ships. Labor candidate for the federal seat of Solomon in Darwin, Luke Gosling, said the Prime Minister had misunderstood the port lease deal. "According to the Chief Minister of the Northern Territory's release, the facilities that are included in the lease of the port for 99 years – almost a century – includes facilities like Fort Hill Wharf that are used not only by the Australian Navy but also the militaries of other countries as well, so it would be good if the Prime Minister, when coming to the north, knew what he was talking about," he said. Treasurer Scott Morrison announced on Thursday that he would be discussing the question of foreign investment in state government-owned assets – which are not under Canberra's control – with the states and territories. WORKING OUT A MECHANISM Mr Turnbull said on Friday "the first question is should there be a more formalised legal process of consultation with the FIRB and that is what Scott is talking to the states and territories about". "I am sure we will work out a mechanism", he said. "Having said that, in respect of this port lease, there was a consultation, as recommended by the NT Parliament's own committee. There was a consultation with the Department of Defence, and this has happened some time ago, and the conclusion was that they were happy for the sale to this party, Landbridge, to proceed. "I don't think we should be critical of the NT Government. They did the right thing. They consulted with the Department of Defence and the Department of Defence came back and said no, that is fine. "Why are we reviewing the rules? The reason we are reviewing the rules is not because we regret the decision made by - the advice given by the Department of Defence but just that it clearly makes sense for all foreign acquisitions of the relevant size to be subject to the same process. That is purely an orderly administrative thing to do, to make sure that there aren't gaps in the law. That is a gap that has been there for some time."
22-11-2015, 01:23 PM
Just over a month ago, Bob Katter – the eccentric independent from Far North Queensland – asked Josh Frydenberg, the newly-appointed Minister for Northern Australia, to explain a little-known deal to lease the Port of Darwin. With his trademark delivery of man caught halfway between tears and hysterical laughter, Katter used Parliament's question time to ask whether the Australian government's decision to allow the sale of public asset, the Port of Darwin, to a Chinese company called Landbridge for $506 million would transform it into a "foreign corporate, unrestrained, monopolistic money machine" that dominated half of Australia's vast northern coastline? In the theatre of federal parliament, all attention was focused on Frydenberg's reaction and none on the substance of the question. Frydenberg started to give a stock-standard answer, but started spluttering with laughter at Katter's increasingly frantic shouting and gesticulating. Eventually the Member for Kennedy walked out in disgust, muttering about the foolishness of appointing a Melbourne-based lawyer as the minister responsible for Northern Australia. It was a five-minute diversion that was quickly forgotten in the hubbub of mainstream politics. This week that small matter of a 99-year port lease signed last month to a Chinese company with links to the People's Liberation Army has exploded into an international controversy. United States President Barack Obama publicly chided and embarrassed Malcolm Turnbull on the world stage for not keeping him in the loop, and defence analysts warned of national security risks in selling off a strategic asset used by the Australian navy, the US Marines and the navies of our friends and allies. It cast an immediate cloud over the future of other major infrastructure sales such as that of the NSW electricity grid, TransGrid, and brought new scrutiny to bite-by-bite acquisitions of Australia's gas and electricity network by Chinese interests. But what appears on the surface as a conflict between national security and foreign investment, has actually revealed itself as a more profound realisation of Australia's small role in China's grand, multi-generational plan known as "One Belt, One Road". BIGGER AMBITIONS More than 200 years ago military genius Napoleon Bonaparte warned China was a sleeping giant. "Let her sleep, for when she wakes she will move the world," he said. The sleeping giant metaphor has become a cliche for the rise of China. But this month, as new parents go searching for baby formula on empty Australian supermarket shelves cleaned out by opportunistic small-time exporters of China's latest status product, Australia is starting to feel the tremors. "One Belt, One Road sounds daggy to us but it's deadly bloody serious," says Hugh White, professor of strategic studies at the Australian National University's Strategic and Defence Studies Centre. The very name of the consortium buying the Port Darwin lease, Landbridge, is an obvious clue to China's larger ambitions. Australia is only a small part of China's global spiderweb of trade routes and White says we can be part of that or we can choose to exclude ourselves but it would mean also locking Australia out of the majority of the future economy. The sensitivity to foreign investment is hardly a new thing, starting more than 200 years ago with Britain's colonisation of Australia, followed by waves of investment by Japan, then Russia in the 1990s, and the sale of farmland to rich Arab states like Qatar and finally China. The difference this time comes through the sheer size of Chinese money flowing into Australia and what the geopolitical shift to Asia means for our old allies, the US and Britain. Those surprised by China's growing direct investment in Australia have been living under a rock. Reserve Bank of Australia governor Glenn Stevens said in July that markets need to prepare for a world where China invests $400 billion a year offshore, much of it in Asia as it increasingly liberalises. The figure is equivalent to more than 25 per cent of the Australian economy China's rapid rise was first made clear to the world's economic elite in the early 2000s at events such as the Davos World Economic Forum. Back in 2002, Chinese officials and business leaders hit the forum in force, foreshadowing the nation's rise over the subsequent decade to a level where it now challenges the US economy's dominance. In closed-door sessions, the abiding memory of participants was that China's leaders were thinking and planning over the long-term, across multiple generations, as opposed to the west, which was stuck in tight, multi-year political cycles and the emerging fight against terrorism. THE FALL-OUT China is by far Australia's biggest trade partner, with two-way trade hitting a record $152 billion in 2014, more than the combined trade with Japan and the US, the second and third biggest. Two-thirds of the trade with China is exports from Australia. For the first time this year, China became Australia's biggest source of approved foreign investment after a $12.4 billion splurge on real estate last financial year. Chinese investors planned to spend $27.7 billion here, according to the Foreign Investment Review Board annual report, overtaking US investors who were approved to spend $17.5 billion. But in Australia – somewhat embarrassingly – most of the political and media attention in the real-estate obsessed major cities have been focused on the proliferation of Asian faces. Similarly the foreign investment debate has largely been captured by the Nationals' campaign to limit China's acquisitions of farming land, leading to a dramatic tightening of foreign investment rules so that any cumulative acquisitions of agribusiness and farmland worth more than $15 million requires the approval of the FIRB. Stung by fallout from the Port of Darwin lease – as well as the looming sale of the NSW electricity grid – Treasurer Scott Morrison moved this week to review laws that allow states to sell strategic assets to foreign companies without federal scrutiny. FIRB often doesn't need to be called in when states and territories sell assets, a potential shortcoming that will be subject to a Senate inquiry launched by independent senator Nick Xenophon. The question of where exactly FIRB oversight should kick in was highlighted by Morrison's decision on Thursday to block the sale of Australia's largest privately-owned land holding and cattle company, S Kidman & Co, to a Chinese bidder because of its proximity to Woomera. NO SIMPLE ANSWERS Two Chinese companies offered to buy the business for between $325 million and $350 million, a price that drew the automatic attention of FIRB's investigators. White says there are no simple answers to the way Australia deals with China's encroaching reach on our landholdings, infrastructure assets and even our politics. "Should we be concerned? Yes. Should we say no to Chinese investment? No," White says. This is not about spies, or intelligence gathering by our biggest trading partner. It's about a fundamental reshaping of the global economy and Australia's relationship with the world's biggest economy. White believes the national security implications of having a Chinese government-linked company owning a strategically important asset like Darwin's port are "manageable" because the potential to spy on a few US marines nearby is only of small importance to China, which is far more interested in building a land bridge between Australia and China.
22-11-2015, 10:54 PM
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by Angus Grigg In his home town of Rizhao, the Chinese businessman who paid $506 million to lease Darwin's port, is known as the "invisible billionaire". Despite owning a petrochemicals plant, bulk commodities port, timber mill, hotel and petrol stations, Ye Cheng, has almost no public profile. "Perhaps he only talks to Xi Jinping," joked a local trader in reference to China's president. This is not to say Ye's connections are anywhere near that level, but it indicates he has a strong relationship with the local government and therefore requires little else. Community relations certainly don't appear a strong point for his Landbridge Group. Even by Chinese standards its home base in the Lanshan district south of Rizhao, halfway between Shanghai and Beijing, is bleak. It is a town of stray dogs and cats eating out of rubbish bins. Despite a sea breeze, pollution hangs low in the sky and when mixed with construction dust leaves eyes running and lungs burning. As for landmarks the town has three – there's Rizhao Steel, Landbridge Petrochemicals and a Sinopech oil receiving terminal. Apart from that there's rubble from demolished houses and truck repair shops for drivers transporting oil, chemicals and commodities out of town. The Australian Financial Review visited Lanshan on Thursday, after spending three weeks unsuccessfully trying to arrange an interview with Ye or another senior executive from Landbridge. Emails were ignored and phone calls not returned. Landbridge's silence is despite the company being at the centre of a diplomatic and foreign investment storm, which has gone all the way up to United States President Barack Obama. He chided Prime Minister Malcolm Turnbull last week at meeting of regional leaders in Manila for not informing Washington before Landbridge was sold a 99 year lease over the Port of Darwin. The Americans are not happy about a strategic rival controlling a crucial piece of infrastructure in a city where they have 1,150 marines on rotation. Then there's the question of Landbridge's connections to China's military, through its people's armed militia, which the company has refused to explain beyond a one line denial. The issue is that the Americans and plenty of others don't believe Landbridge or any other private Chinese company is not beholden to Beijing in some way. In Rizhao, the local traders who use its port say Landbridge is easier to deal with and more flexible than the state-owned ports. "It [Landbridge] is one of the top private enterprises in Shandong Province," says one trader who asked not to be named. "They would not buy the port in Darwin to please the Chinese government, it's a commercial decision," he said. But then in the next sentence the group of traders, who have gathered to drink tea, smoke cigarettes and bemoan the weak iron ore price, all agree Landbridge would have received government support to finance the Darwin Port acquisition. It is this grey area between private and government linked companies in China which is causing so much anguish in Australia and many other parts of the world. Landbridge's refusal to explain how it fits into the complex web of interrelationship is feeding the uncertainty. Mr Ye's office told the AFR on Thursday it was "not convenient" for us to meet with anyone from the company or have a tour of its petrochemicals plant. The company's website is equally unhelpful about the 53-year-old's background. In an interview with the Rizhao Daily, Ye revealed he started out in business as a crude oil wholesaler in 1992. That's an auspicious year for Chinese capitalists as it's when former leader Deng Xiaoping made his famous southern tour and signalled that making money was no longer frowned upon. Ye appears to have heeded this advice and quickly moved from oil into logistics, duty free shopping, petrochemicals and property. In 2004 he won approval to build one of the first private ports in China, but nearly went broke during the construction phase, telling the newspaper his workers didn't get paid for eight months. And he had one piece of advice for China's new generation of entrepreneurs. "You will never be wrong if you closely follow the government's policy," he said. These days the Landbridge Port brings in iron ore, coal, timber and nickel and is undergoing a major expansion which will allow it to also handle greater volumes of petrochemical and oil. "He [Ye] is one of China's invisible billionaires," said one trader. "These people are very low profile. They made their money during China's golden decade when if you had good connections to the government and were brave enough to borrow money you could get very rich." "It's not so easy now, that's why everyone is looking overseas." The traders believe Ye, who Forbes magazine estimate is worth $US1.4 billion ($A1.97 billion), plans to forge closer links between the Darwin Port and his operations in Rizhao. "Darwin is the closest port to China. I think he will use it to ship iron ore and oil and increase the business of his port in Rizhao," said one trader. |
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