SYDNEY, June 21 (Xinhua) -- Australia has granted a three-year extension for a Chinese company to reduce its 80-percent stake in Australian cotton farm Cubbie Station after it indicated it could not meet the October 2015 deadline.
Australia approved the sale of Cubby Station to a consortium comprising Shandong Ruyi Scientific & Technological Group Co. Ltd. - 80 percent - and local company Lempriere - 20 percent - on the provision that the textile manufacturer would reduce its holdings to 51 percent within three years.
Though foreign ownership of Australian farmland is a sensitive political issue, heightened in the current general election, Australian Treasurer Scott Morrison granted the extension as a reflection of the "genuine undertakings" Shandong Ruyi had made reduce its interest.
"It also recognizes the fact Ruyi has met the other undertakings placed on it through the FIRB approval process," Morrison told Xinhua on Tuesday.
Australian agriculture lobby groups however are concerned about the inconsistent messages coming from Australian authorities over foreign investment into farmland after a Chinese consortium was prohibited from purchasing arid cattle producer S. Kidman & Co., Australia's largest land holding.
"The industry's quite happy to have a firm 'yes' or 'no', but they need to know before they go into the due diligence or analysis or the proposal of a purchase as to what the rules are," Agribusiness Australia spokesman Tim Burrows told Australia's National Broadcaster.
"We can't have a situation where the rules change many months after the investor's started looking at the project or the proposal."
Australia in February changed its regulatory framework for foreign investor purchases into agriculture, slashing the threshold for Australia's Foreign Investment Review Board (FIRB) approval to 15 million Australian dollars (11.21 million U.S. dollars).
Instead of taking unenforceable undertaking applications as with the previous Labor party government, applicable to Shandong Ruyi, the FIRB now imposes binding sale conditions on applications.
Local analysts however have said the FIRB's, and subsequently Morrison's granting of an extension was not unusual.
"In relation to the one-off conditions like the divestment orders, what FIRB normally likes to see is progress toward the goal," Herbert Smith Freehills partner Matthew FitzGerald told the ABC.
"And if there are problems with the conditions being met, it wants to understand those issues and how they're being addressed."