Wednesday, 3 March 2010

Miners buying up rich farm land in Australia to feed China growth

Mining groups are on a collision course with Australia’s farmers in a battle for some of the country’s richest agricultural land, putting at risk its status as the one of world’s top producers of best-quality wheat.

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Guanyu 道 said...

Miners buying up rich farm land in Australia to feed China growth

Reuters in Sydney
02 March 2010

Mining groups are on a collision course with Australia’s farmers in a battle for some of the country’s richest agricultural land, putting at risk its status as the one of world’s top producers of best-quality wheat.

The miners, including the world’s biggest, BHP Billiton, and China’s state-owned Shenhua Corp, are pushing into prime farmland northwest of Sydney in search of coal to meet burgeoning demand from Chinese steel mills and power stations.

Their inexorable advance has doubled land prices in the region over the last five years, a price jump that threatens to tighten global supplies of high quality wheat, as farmers accept high offers from miners and quit their land.

The Australian government predicts the mining boom could run for 20 to 30 years, fuelled by demand from China and India.

The miners say the rich black soil of Australia’s Gunnedah Basin, some 330 kilometres northwest of Sydney, and home to large water reservoirs underground, could produce billions of tonnes of coal.

Two years after the miners began waving their cheque books, farmers have signed over 85,000 hectares, or enough land to support 425,000 tonnes of wheat each year - or nearly 2 per cent of the national crop.

Other farmers, though, oppose the miners moving in and are blocking BHP Billiton from prospecting on their land, forming picket lines to bar access to the miners’ drilling rigs in a 20-month stand-off that could be repeated elsewhere in Australia.

The phenomenon has also spread to the grains heartland of Western Australia, the country’s top wheat-exporting state as well as the state of Queensland, where coal mining is also expanding.

On the Liverpool Plains of the Gunnedah Basin, where wheat yields often exceed five tonnes a hectare, more than double the national average, the stakes are high.

Farmers fear mine expansion in the Gunnedah Basin could contaminate the region’s water supply, hurting grain production, and have kept up their protest blockade against BHP although Australian law gives landowners no rights to minerals beneath their property.

The effort bore fruit when the mining giant indicated last year it would narrow its exploration focus.

“I certainly don’t think we’re losing the battle as we’ve succeeded in getting BHP to take a slightly different view than previously,” said farmer Timothy Duddy, who has led the campaign against BHP’s US$2 billion Caroona project in the Liverpool Plains.

Green groups also oppose the encroachment by miners.

“We need to be safeguarding agricultural land as the world’s population grows - the Liverpool Plains is particularly precious, so that’s why it needs to be protected from mining,” said Lee Rhiannon, a Greens Party member in the state parliament of New South Wales.

A BHP spokeswoman said mine development would only proceed if it could be proved that water supplies were protected.

BHP paid some A$100 million (HK$691.6 million) in 2006 to explore a 344 sq-km area that could contain more than 500 million tonnes of coal.

Shenhua has decided not to wait for a water study before kicking off a plan to develop an open cut mine and hopes to start mining by the end of 2013 if it wins development approval.

It paid A$300 million in 2008 to explore over 195 sq km that could contain 500 million tonnes of coal.

“What is proposed to be an open cut mine is located within the ridge country and not in the black soils of the Liverpool Plain,” a Shenhua spokeswoman said.