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Iron Giants Graze Cows on Land Size of Connecticut

August 6, 2014

The world's second largest iron exporter also happens to be one of the largest cattle ranches in Australia. Both of those commodities are in high demand from China.

Rio Tinto Group is the world’s second-largest exporter of iron ore. It’s also one of Western Australia’s biggest cattle ranchers, with room for 25,000 head to graze on land spanning an area larger than Connecticut.

Global demand is surging, driven in large part by China’s expanding appetite for beef. At the same time, prices for iron ore are projected to slip. That’s making cattle more attractive to Australian mining companies, a complementary business that generates revenue from land that otherwise would be idle.

Hancock Prospecting Pty, the mining company owned by Australia’s richest woman, and Andrew Forrest, the billionaire founder of Fortescue Metals Group Ltd., the world’s fourth- biggest iron ore exporter, are also moving into the cattle industry.

"The trouble with iron ore is you have to dig it out and move it by truck but the great thing about cattle is they walk there for you," Australia’s Agriculture Minister Barnaby Joyce, said in a phone interview. For mining companies, "it’s just the movement of another commodity."

Purchases of Australian food and agriculture assets have had the strongest first half in at least 12 years, with more than 20 deals announced this year worth at least $2.6 billion, according to data compiled by Bloomberg.

They include Forrest’s May acquisition of Harvey Beef, Western Australia’s only licensed beef exporter to China, and Hancock’s purchase of a 50 percent share last month in two cattle stations, or ranches, in Western Australia’s West Kimberley.

Joyce expects to see more such deals by mining companies. "They are key people with the right expertise to make this work."

Australia-China Partnership
Forrest, who once farmed alpacas and grew up on his family’s Minderoo ranch, this year founded the Australia Sino Hundred Year Agricultural and Food Safety Partnership to facilitate discussions between Australian suppliers and Chinese consumers.

He held talks with Chinese Premier Li Keqiang in April to discuss the bilateral agricultural partnership. The world’s most populous nation is so desperate for good beef that Forrest told Bloomberg News in May he would be taking steak samples in his luggage on his next trip.

Australia, the world’s third-largest beef exporter, saw beef and veal exports to China surge 76 percent in fiscal 2014, according to the Australian Bureau of Agricultural and Resource Economics and Sciences.

China is already the biggest consumer of meat and may double beef imports by 2018 as the country’s increasing wealth drives changes in consumers’ diets, Rabobank International said in December.

Rio Tinto Ranches
Rio has six ranches in the Pilbara that cover more than 1.5 million hectares (5791 square miles) of land, to allow access for exploration, infrastructure development, water management and future mining and production, according to its Website.

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RELATED TOPICS: Beef, Cattle, Exports, Beef News

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