Kempen’s SDG Farmland Strategy has a new investment in farmland in Australia. The area had been purchased by a Chinese mining giant for mining coal, but protests highlighting the dangers of soil pollution and the threat to the local Koala population eventually led to the permit being withdrawn. Today, the area is being dedicated to long-term, sustainable agriculture, in a joint venture supported by the Kempen.
Local protesters win against coal giant
Protests against the coal mine lasted almost fifteen years, but eventually led to success.
In 2006, the Chinese state-owned mining giant Shenhua purchased pieces of land in the Liverpool Plains, a scenic and fertile area almost 500 km north of Sydney in southeastern Australia. Shenhua’s plan was to extract 290 million tonnes of coal from the ground over a period of 30 years.
When local residents heard this, they started to protest as fears that the mines and excavations would pollute the water resources in the region increased. Not only that, but the Koala population would be threatened by the long-term work. Koalas, those iconic natives of Australia, had been virtually wiped out by the beginning of the 20th century in Australia, but thanks to a long-term relocation programme in the eastern states, the population had finally begun to grow again. It had to stay that way.
Despite the many protests, Shenhua was awarded an exploration licence by the state of New South Wales. The protests then grew in intensity, continued over years and environmental organisations lobbied against the decision. Following years of intense public pressure, last year the New South Wales government withdrew the mining licence. The company, which had yet to start work, demanded and received 100 million Australian dollars in compensation and sold the enormous piece of land.
For the region, it was clear. The agricultural and natural area of more than 16,000 hectares – bigger than 22,000 football pitches - had to be retained for the region. In the end, twelve farming families from the region and an institutional investor bought the same number of plots from Shenhua for a total of 120 million Australian dollars.
This institutional investor is a joint venture of the Kempen and the Clean Energy Finance Corporation (CEFC), a bank owned by the Australian federal government that invests exclusively in sustainable projects. Together they have bought roughly one third of the total area, a 6,000 hectare plot called Breeza. This land had previously been used as farmland and cattle pasture, and has much potential for improvement.
The land was bought at an auction. Kempen and CEFC teamed up with local farmers who wanted to buy a few smaller, high-value pieces of farmland within the Breeza area and were willing to pay a premium for them. This meant that Kempen and CEFC were able to outbid several large institutional investors. One of the conditions of the sale was that the new owners must provide 'koala corridors' so that the animals can roam freely.
In addition to a plot of about 3,500 hectares on which crops such as wheat, barley, rapeseed and chickpea are already cultivated, about 1,500 hectares of somewhat neglected land will be revitalised for crop production. Furthermore, part of the land will be used for environmental management, including the planting of native plants. Moreover, Kempen and CEFC are looking into whether the plot is eligible for generating carbon credits and biodiversity credits.
For the Kempen SDG Farmland Strategy, this is now the third farming area in Australia. Last year the Fund invested in two other areas in the same state: an avocado plantation and a piece of agricultural land for grain, pulses and maize crops. The latter project was also a joint venture with CEFC.
The portfolio of the Kempen SDG Farmland Strategy, which was set up over a year ago, consists of 12 farmland projects in four different countries. In addition to Australia, it has invested in land projects in Denmark, Portugal and the United States. At the end of March, the strategy had €382m in committed capital. The strategy was initially launched in conjunction with the multi-billion investor Pensioenfonds PostNL (the Dutch postal workers’ pension scheme), and today its clients include retail investors, family offices, as well as Dutch insurers Coöperatie Dela and De Goudse.
The investment team is always looking at new opportunities, and they are currently evaluating potential investments in New Zealand and the United Kingdom.
The information contained within this publication is provided for general and reference purposes only. Under no circumstances may the information contained within this publication be construed as an offer nor may any rights be derived therefrom. In preparing this publication, we have exercised the greatest possible care in the selection of external sources. We provide no guarantees whatsoever that the information provided by these sources and contained within this publication is correct, accurate, and complete, nor that it will remain so in the future. We accept no liability whatsoever for any misprints or typesetting errors. We are under no obligation whatsoever to update or modify the information we have included in this publication. All rights with respect to the contents of the publication are reserved, including the right of modification.
Capital at risk. The value of investments and the income from them can fall as well as rise and are not guaranteed. Investors may not get back the amount originally invested. Past performance provides no guarantee for the future.