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by Angus Grigg
When Tony Abbott killed off the carbon tax in 2014, environmental entrepreneur Chris Mitchell needed a new project.
The former head of climate change at CSIRO had been sequestering carbon in eucalyptus trees, but without policy support his business had few prospects to grow. So he looked to water and finding its highest value use. That turned out to be gold mining, but coming in second was prawn farming.
"As a marine biologist that worked out pretty well," said Mr Mitchell, the chief executive of ASX-listed Sea Farms.
"We are really just a giant irrigation project," Mr Mitchell said during a visit to Kununurra. "But instead of paddocks we are watering ponds."
Significant investment
In addition to Sea Farms, the Chinese-backed Kimberly Agricultural Investments is just over halfway through a $400 million investment in the Ord, which will create a cotton, cropping and cattle operation to rival Queensland's Cubbie Station.
The nearly $2 billion in private investment going into the region is providing much-needed scale to the Ord, which has been hindered by its isolation since the first irrigation dam opened in 1963.
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For Sea Farms, the Ord's isolation is one of its greatest virtues. "In aquaculture disease usually comes in from the farm next door," Mr Mitchell said.
That should not be a problem for the company as its farm will be built on Legune Station, a 3000 km² property two hours drive from Kununurra.
All going to plan Sea Farms will give final investment approval to the $300 million stage one development by March, in time to begin construction soon after the wet season finishes. It has environmental approvals for 1000 hectares of ponds with the first harvest due in 2020, after two years of dry season construction.
The overall project, which will eventually comprise 10,000 hectares of ponds at Legune, will be complemented by a quarantine centre in Exmouth, a hatchery outside Darwin and a processing plant near Kununurra, which will employ around 100 people. All up the project will cost around $1.5 billion.
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Sea Farms, which has a market value of $225 million, is backed by Japanese sea food giant Nissui, which has taken a 15 per cent stake in the company and agreed to buy up to a fifth of its production of black tiger prawns each year.
This is the type of mining scale investment and offtake agreement required to make agriculture work in northern Australia, according to former Trade Minister Andrew Robb, who is an adviser to Sea Farms.
"Development, which has been a dream for 100 years, is finally starting to happen," Mr Robb said. "The combination of capital, new technology and transport links has made it all possible."
Mr Robb's involvement is ironic given he was a key early backer of Mr Abbott and his hardline stance against climate change action, which killed off Mr Mitchell's earlier business venture, CO2 Australia. "I was the main advocate for Northern Australia in cabinet so it's great to see developments like this starting to happen," Mr Robb said.
Infrastructure upgrade
The Sea Farms project has become a possibility due to the upgrading of roads, water channels and social infrastructure around Kununurra from 2008 onwards, with $528 million in funding from the WA state government and the Commonwealth. That investment opened up a new irrigation district known as Ord Stage II, which is being developed by KAI.
Sea Farms won't use the same irrigation channels but will utilise the sealed road running past Ord Stage II, while the Northern Territory government has committed a further $80 million to build roads and bridges to Legune, which sits just over the border.
The company will also indirectly tap into the social infrastructure built in Kununurra as staff for its prawn farm and processing centre will be based out of the town of ,000 people.
Apart from isolation, the other factor that made the region around Kununurra so attractive for Sea Farms was its ability to access vast amounts of coastline and fresh water. "There are not many other places on the coast where this would be possible," Mr Mitchell said.
While the ponds are on land they will be filled with a combination of salt and fresh water, something the region has in abundance. Legune has one of the biggest private dams in Australia, which should be easily filled most wet seasons in a region that gets as much as 1.6 meters of rain.
Access to such a vast amount of water would be more difficult in eastern Australia, which has suffered rolling droughts and political pushback against big water users like Cubbie Station.
"The agreement will deliver long-term benefits to traditional owners and other Aboriginal people," said chief executive of the Northern Land Council Joe Morrison.
It will not only provide jobs but a local Indigenous enterprise has been awarded one of the early construction contracts valued at around $1 million, with further contracts to follow.
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Another AFR article the constant investor has a story behind a paywall if anyone has access ......
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