NOW THEY'RE SELLING OUR WATER

http://www.smh.com.au/environment/water-issues/thirsty-foreigners-soak-up-scarce-water-rights-20100903-14uev.html

INTERNATIONAL investors are circling Australia's water market, looking to snap up hundreds of millions of dollars worth of our most precious national resource, with almost no government limit on how much they can buy.

Foreign investors have already bought millions of litres of water rights in our most strategic food-producing areas and are poised to buy more after the massive shake-out tipped to occur when the long-awaited Murray-Darling Basin plan is released.

The head of an Australian fund designed to cash in on future water scarcity leaves tomorrow on a trip through Asia, North America and Europe aimed at raising $100 million from investors to buy water in the Murray Darling Basin.

''There is a chronic supply/demand imbalance for Australian water which will result in higher water prices,'' says the website of the Causeway Water Fund, whose managing director Richard Lourey will scour the world for investors.

Water has become a hot-button topic for the federal rural independents locked in talks over who will form government.

Overseas stakes in our $30 billion market already include:

$20 million worth of entitlements bought by the US-owned Summit Global Management through an Australian subsidiary;

An estimated $130 million worth of water bought by Olam International of Singapore in a deal involving the purchase of almond groves in northern Victoria;

More than $30 million worth of rights in western NSW held by Tandou which has substantial overseas ownership.

Meanwhile, the chief executive of the NSW Irrigators Council, Andrew Gregson, has revealed that merchant banks have approached the organisation for advice on how European investors can pour hundreds of millions of dollars more into Australian water.

In some financial circles water is dubbed ''blue gold''. The online investment journal Investment U recently had the headline, ''The oil of the 21st century … how 'blue gold' can make you rich''.

Australia has spawned the most advanced water market in the world, with more than $3 billion worth of rights changing hands last year.

More than $2 billion of that trade took place in NSW, making this state's water market equal to the entire value of the country's wool exports.

The federal Labor government helped inflate the price by buying more than $1 billion worth of water as drought bit last year, accelerating its $3.1 billion buyback of water in the Murray-Darling Basin.

After good rains and a change to the government's tender system, prices have dropped by as much as 40 per cent this year, hurting irrigators who need to sell their water rights, but making buying into the market more attractive to investors.

''We know that water is a scarce resource in a resource-starved world,'' said Guy Kingwill, the chief executive of the agricultural company Tandou, which has substantial US and British investors.

''We are long-term investors in secure water entitlements and Australia is one of the few countries in the world where you can own those,'' he said.

Yet there is virtually no oversight from the Foreign Investment Review Board.

The federal Treasury says it never looks specifically at foreign acquisition of water licences, and takes an interest only if a foreign player is buying an agribusiness worth more than $231 million.

Mr Lourey rejects fears about ''water barons'', claiming his investment fund will allow ''water to be used in the most productive way possible. We would argue that's in Australia's strategic best interests''.

But farmers' groups are worried that big players could corner areas of the market by buying up permanent rights in whole valleys, or being able to dictate what food is grown where by controlling water.

''We don't have a problem with investment, or indeed, speculation in the water market,'' said Mr Gregson of the Irrigators Council. ''We are concerned about market dominance. It's a recently developed, relatively fragile market.''

FOREIGN OWNERSHIP

ONLY a tiny handful of water bureaucrats in each state has full knowledge of who owns the country's permanent water rights, as water registries cannot be openly searched. Some foreign acquisitions of water that have emerged include:

Summit Global Management, founded by John Dickerson, of San Diego, owns $20 million worth of water through its Australian subsidiary Summit Water Holdings. The company wants to buy more.

The Singapore company Olam International acquired nearly 90,000 megalitres of permanent water along the Murray when it picked up the almond operations of the failed managed investment scheme Timbercorp last year. The land and water were valued at $288 million.

The British investment fund Ecofin owns 20 per cent of Eastern Australia Irrigation, a company with extensive land and water holdings in south-eastern Queensland.

Tandou Limited owns Tandou Farm, near Menindee Lakes, in far western NSW. A fierce takeover battle this year has left the company dominated by the New Zealand corporate raider Sir Ron Brierley's Guinness Peat Group (28 per cent), battling it out with Ecofin (19.9 per cent) and the US company Water Asset Management ( 13 per cent). Tandou's most valuable asset is $30 million worth of water rights.

A Japanese consortium led by Mitsubishi Corporation acquired the Australian water businesses of the British company United Utilities in May.

Causeway Asset Management, of Melbourne, wants to attract $100 million from foreign investors to a ''diversified portfolio of permanent water entitlements'' in Australia.

forwarded by Bob Vinnicombe