February 23, 2016

After much contention and push-back from Australian parties opposed to the foreign purchase of Australian agricultural assets, China’s Moon Lake Investments has been granted approval by the Australia’s Foreign Investment Review Board (FIRB) for the acquisition of the country’s oldest and largest dairy operation, Van Diemen’s Land (VDL) for A$280 million (US$202 million), according to Reuters.

Federal Treasurer, Scott Morrison said that the deal satisfied the country’s national interest test including its potential effect on local jobs and economic growth.

'Moon Lake has also committed to undertake a number of investment projects in the VDL farms, which will provide additional economic activity to the Tasmanian economy, and based upon Moon Lake’s estimates will result in a near doubling of employment at VDL,'' Mr Morrison said, reports The Examiner. ''This will guarantee more than 140 local jobs, generate an intended additional investment of over $100 million and an expected additional 95 jobs.''

Although granted approval, this deal is the first overseas transaction subject to new FIRB conditions holding Moon Lake responsible to comply with new Australian taxation codes requiring the company to advise the Australian Taxation Office (ATO) if it enters into any deals with non-residents. Such rules were recently enacted after pressure on the government to ensure that overseas companies are unable to transfer profits to offshore tax shelters in order to avoid paying Australian taxes, according to Reuters.

“A breach of these conditions could result in prosecution, fines, and potentially divestment of the asset,” said Morrison.

ABC reports that Moon Lake has expressed that it will continue to fulfill all milk supply contracts currently in place for VDL and assures that the deal will pose no negative impact upon the supply of Australian milk and dairy products. The company has also stated that it plans to work with both Federal and State agencies on land management, farming, and Aboriginal cultural initiative, reports Stuff.co.nz.

In business for 190 years, VDL milks 17,890 cows and has 7,062 hectares across 25 farms, producing about 8 million kilograms of milk solids per year. In addition, the Tasmanian government has granted the company approval to clear more than 1,800 additional hectares for expansion.