The changing face and future of S. Kidman & Co

This week's property review looks at the reasons behind Gina Rinehart's two pastoral businesses - Hancock Agriculture and the S. Kidman & Co joint venture - changing course, as well as some interesting developments in the property space involving the companies.

Over the last five years, no one has been more active in the Australian grazing property market than Ms Rinehart, both as a buyer and seller.

Hancock Agricultural and Kidman Cattle Co operate around 240,000 branded cattle (with more expected after the next muster) on six million hectares across 22 properties (including many aggregations) in New South Wales, Queensland, Western Australia, and the Northern Territory.

Hancock also operates a number of specialised Wagyu feedlots as part of its Wagyu programme. More on that in Beef Central's newly announced Top 25 Lotfeeders article, which will be published over the next four weeks.

Mrs Rinehart's decision to sell eight properties totalling 1.9 million hectares in 2020 was seen by the media as the first evidence of her "bowing out" of agriculture. The allegations could not be further from the truth.

Australia's wealthiest woman was merely realigning her strategy in order to increase the genetics and quality of her cattle while also achieving a better balance between breeding and finishing country.

There’s also compelling evidence it was about reducing her exposure to northern live export trade, in favour of traditional Australian production and processing.

Hancock Agriculture

Prior to its success in mining exploration, the Hancock family owned and maintained several well-known cattle stations in Western Australia's north, including Ashburton Downs and Hamersley Station.

When Mrs Rinehart took control of Hancock Prospecting, she diversified her business interests beyond iron ore and made a string of cattle station investments including:

• 400,000ha Fossil Downs (capacity of 20,000hd), Kimberley, WA
• 265,000ha Liveringa (capacity 28,000hd), Kimberley, WA
• 312,730ha Mulga Downs (capacity 8000hd), Pilbara, WA
• 203,142ha Nerrima, Kimberley, WA. In September 2021, it was sold to WA’s Emanuel family for around $30m (including 15,000hd cattle).
• 171,000ha Willeroo, adjoining Aroona, west of Katherine, NT. In October 2021, it was bought by Hamish and Georgia Brett (Brett Cattle Co).
• 147,000ha Aroona, near Katherine, NT. In December, it was purchased in December 2021 by the DiGiorgio Family, Lucindale, South Australia.
• 3500ha Phoenix Park live export depot and holding facility near Katherine. In January 2022, it was sold to Crown Point Pastoral (a joint venture between Viv Oldfield and Danny Costello).
• 550,000ha Riveren and Inverway, Victoria River District, Northern Territory. In April 2022, it was sold to Peter and Jane Hughes for around $100m including 40,000 head of cattle.
• 457,200ha Brunchilly Station (capacity 24,000hd) breeding operation on the Barkly Tablelands of the Northern Territory. In November 2022, it was well advanced in a sale process along with three historic Channel Country backgrounding and grass finishing holdings in south-west Queensland.

Realignment

Brahmans destined for live export featured heavily in Hancock Agriculture's previous business model, and while they are still run on some Western Australian holdings such as Fossil, Liveringa, and Mulga Downs, they have been largely replaced by Droughtmaster composite cattle in the vast northern areas, and Wagyu in New South Wales, Queensland, and southern Western Australia as the pastoral portfolio has been restructured in different areas.

Hancock Agricultural is currently focusing on developing a premium Fullblood Wagyu herd, with a medium-term goal of turning off 12,000 head each year.

The company is focused on perfecting its grainfed concept. In the parallel Kidman company, certain Santa Cruz country cattle are currently being trialled on 150-day regimens, increased from 100 days, in an attempt to balance meat quality with overall economic return.

Adam Giles, interim CEO of Hancock Agricultural and S. Kidman & Co, stated that it was all about 'paddock to plate'.

"Our grazing lands breed, background, and finish animals, while our cropping holdings provide the grain that our feedlots feed to the cattle to increase meat quality. In addition, we have a meat sales and marketing staff that oversees the processing and distribution of the product."

Hancock Properties

Hancock Agriculture has been purchasing grazing land in greater rainfall areas of southern Queensland and northern New South Wales for nearly ten years, making it perfect for Wagyu operations. Here's some of the deals:

• November 2014 – A series of small dairy, beef and peanut properties covering more than 3500ha in southern Queensland’s South Burnett. When plans for the Hope Dairies Mary Valley milk powder operation were shelved, the aggregation was repurposed into a Wagyu beef breeding operation.
• December 2014 – the 4600ha Dubbo district grazing properties Boogadah and Caigan near Mendooran were purchased for $25m including the 3000 head highly regarded Green Hills fullblood Wagyu cattle herd (including 1600 elite fullblood females).
• November 2015 – the showcase 10,000ha Glencoe Station, north of Dubbo, is purchased for $30m.
• December 2016 – 1011ha breeding property Hiddendale, also north of Dubbo, is added to the adjoining 4600ha Boogadah and Caigan. Together, the three properties are known as the Caigan Aggregation.
• June 2017 – the 8000 head specialised Wagyu feeding business Maydan feedlot near Warwick in southern Queensland.
• December 2017 – Holyrood (adjoining the Rockybank stud farm) and South Maffra at Roma in southern Queensland.
• Forestvale north of Mitchell in southern Queensland.
• August 2018 – 17,800ha Sundown Valley, near Kingstown, west of Armidale – one of NSW’s best known and largest-scale backgrounding and finishing operations. The business also owns another unnamed Kingstown property.
• August 2018 –1607ha 7000-head Gunnee feedlot near Inverell.
• November 2018 – 3234ha Glendon Park Aggregation (comprising four properties), 40km north-east of Armidale.
• October 2019 – historic 3900ha Warrabah Station, between Kingstown and Manilla, west of Armidale. It neighbours the three Lyndhurst holdings spanning 3280ha.

Recently, the corporation diversified beyond these high rainfall locations on Australia's east coast, acquiring ownership of a collection of properties on the outskirts of Perth to grow Wagyu cattle (believed to be near or containing Mrs Rinehart's property Lang's View).

Drought Mitigation Assets

In addition, the forward-thinking organisation has obtained two sizable assets for drought mitigation.

Hancock Ag made its first foray into dedicated cropping country a year ago when it paid between $27m and $28m for the 3073ha Warra Warra in Queensland's Western Downs.

The transaction was viewed as a pure grain gamble, unrelated to the company's livestock or lot feeding interests. The rationale behind the decision was to diversify the company's investment portfolio by acquiring high-quality farming land and water. Warra Warra is bordered by the Condamine River and Cooranga Creek.

Subsequently, in October 2022, Hancock Agricultural paid approximately $150 million for three irrigated farming properties in New South Wales' Wee Waa district. The 6856ha parcel came with substantial, dependable water entitlements, with a total allotment of 23,000 megalitres plus 7000ML of groundwater.

Kidman & Co

Gina Rinehart joined with China's Shanghai Cred (a partnership known as Australian Outback Beef) in December 2016 to purchase the historic S. Kidman & Co for $386.5 million.

Mrs Rinehart saw the majority joint venture purchase as more than just a commercial opportunity.

At the time she said, “the acquisition retains an iconic Australian business in majority Australian ownership and echoes the pioneering spirit of Kidman’s founder, Sir Sidney Kidman – who himself had been in partnership with my maternal grandfather, James Nicholas.”

1. Kidman & Co, founded by pastoral legend Sir Sidney Kidman in the 1890s, was the biggest landholder in Australian history and one of the country’s largest beef producers, with pastoral leases covering 101,000sq km across South Australia, Western Australia, the Northern Territory and Queensland.

In April 2015, the company offered for sale 19 distinct properties managed as 12 enterprises, including 10 cattle stations, a bull breeding stud farm, and a feedlot.

The prospect of the enterprise being owned by foreigners, notably Chinese, sparked a vociferous public protest. Thus, the federal government's approach to Kidman's sale "allowed a local Australian company to pay a fair market price while keeping Kidman under Australian ownership."

Kidman's 23,677sq km Anna Creek (the world's largest cattle station) and The Peake (outstation) were removed from the portfolio and purchased by Williams Pastoral Holdings, decreasing the overall S. Kidman & Co land area to 77,700sq km.

That 2016 business opportunity was based on a proposal to live-export large numbers of Kidman slaughter weight cattle to a Chinese island for local processing. That concept, which attracted widespread national headlines at the time, never eventuated.

Divestment

Hancock Agricultural and S. Kidman & Co announced plans to exit some pastoral holdings from their portfolios in November 2020 in order to focus on other agricultural and livestock possibilities.

The plan was activated in March 2021, and eight properties totalling 1.9 million hectares were put on the market.

Hancock Agriculture declined to comment on the deals, but Beef Central has learned that the eight sites raised approximately $350 million.

The transaction includes Kidman's 7967sq km Ruby Plains aggregation in Western Australia's Kimberley (comprising the 480,000ha calf factory Ruby Plains and the 316,000ha outstation Sturt Creek).

It was purchased for $70 million by notable Alice Springs businessman Viv Oldfield in September 2021, containing approximately 25,000 head of Brahman cattle.

While the South Australian Kidman holdings Innamincka and Macumba Stations were not planned to be part of the Hancock/Kidman divestment process, selling agency Elders got strong interest from a variety of parties.

Mr. Oldfield also obtained the low rainfall, largely arid land with few canals in an off-market agreement in October 2021.

• 13,552sq km Innamincka (capacity 12,740hd) – SA’s second largest cattle station is located on Cooper Creek in the Channel Country.
• 11,063sq km Macumba (capacity 9000hd), located further west, is used for breeding cattle.

Kidman offered its only remaining South Australian beef sector asset, the 18-square-kilometer Tungali Feedlot, in April 2022. (licenced for 4966 standard cattle units).

It was sold four months later to neighbouring grainfed beef producers, Simon Rowe and family's Princess Royal Station, in the state's eastern corner near Sedan (on the edge of the Barossa Valley) (see upcoming Top 25 Lotfeeders profile).

The sale of Innamincka, Macumba, and Tungali marked the end of the historic enterprise formed by Sir Sidney Kidman's 122-year control of South Australian pastoral land.

S. Kidman & Co was far advanced in a selling process to divest three historic Channel Country backgrounding and grass finishing holdings in south-west Queensland, according to Beef Central late last year.

• 5540sq km Glengyle (capacity 7735head) situated in the heart of Georgina River channel country is ideal for breeding and growing cattle.
• 6600sq km Durrie (capacity 9100 head) located in the Diamantina channel country is considered to be some of the best grazing in Queensland.
• 7510sq km Naryilco (capacity 11,520head) on the southern end of the channel country in south-west Queensland is highly regarded for producing excellent bullocks.

Kidman & Co Today

Seven years after the sale of S. Kidman & Co to Gina Rinehart, most of the original portfolio established by Sir Sidney Kidman has been sold off, with just three of the ‘better’ properties remaining:

• 5700sq km Helen Springs (30,000hd) a breeding property on the western end of the Barkly Tablelands in the Northern Territory.
• 8910sq km Durham Downs (including the Woomanooka outstation) – the highly regarded breeding and backgrounding property with a 20,210 head capacity is located in the state’s south-west channel country.
• 6230sq km Morney Plains (capacity 10,695head) – also situated in south-west Queensland is a prized channel country breeding and growing property.

The 14,600ha Rockybank (capacity 3300hd) a stud breeding centre at Roma in south-west Queensland (purchased by S. Kidman & Co just before the sale to AOB) is also being retained.

Where does that leave S. Kidman & Co?

So, where does that leave S. Kidman & Co?

Nothing has changed in terms of governance. Gina Rinehart retains a 67 percent stake in the company, while Shanghai Cred owns 33 percent.

Hancock Agriculture and S. Kidman & Co interim CEO Adam Giles stated that Kidman, like Hancock Agriculture, was realigning its cow genetics to improve beef eating qualities.

“It has moved away from country and cattle that are more suited to tropical areas of Australia to properties that are more consistent with cattle that perform better with backgrounding and feeding and present well when processed for the domestic and export plated market,” Mr Giles said.

Kidman now focuses on 100-day and 150-day grainfed Santa Gertudis, as well as first cross Wagyu cattle fed for 350 days and processed into brand programmes for some of the world's finest hotels and restaurants.

With its recent property divestments, a wealthy Kidman is likely to follow Hancock Agriculture's lead and secure greater rainfall country closer to feedlots and markets.

Beef Central knows that a number of property deals are well underway, with the company also looking at land in Victoria.

It appears that Kidman has acquired all or a portion of Packhorse Pastoral Co's cattle portfolio, which was assembled by the late Tom Strachan.

These three blue-ribbon southern Queensland and northern New South Wales grazing properties are under contract following an expressions of interest campaign that closed in mid-December, however CBRE’s James Auty was unable to discuss the sale due a confidentiality agreement.

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(Credit: Beef Central)