Pengxin: We'll be good stewards

MATT NIPPERT
Last updated 15:56 04/08/2014
Lochinver station

PRIME PLOT: Lochinver Station, near Taupo, is one of New Zealand's largest and most valuable stations.

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The Chinese firm that plans to buy Lochinver Station is disappointed the purchase has become a political football.

Pengxin International says it has not ruled out further farm purchases

Gary Romano, the company's Auckland-based chief executive, said the furore over the sale, which is conditional on Overseas Investment Office (OIO) approval, was surprising.

"Clearly, I'm disappointed," Romano said.

"Here's a piece of land, it's a nice piece of land, but it is underdeveloped. We'll sit on our credentials with what we've done on the other farms."

Pengxin bought 16 farms, covering about 8000 hectares, in the collapsed Crafar group in 2012 for $200 million.

The central North Island Lochinver Station comprises 13,800 hectares, but Romano said of that only 9500 hectares were now viable farmland. Pengxin would look to improve grass pastures.

Pengxin was prepared to make a "very significant investment" in the property to improve its environmental, community and productivity profile, Romano said.

Unwilling to quantify how much Pengxin was planning to spend on Lochinver, Romano said its application to the OIO included plans to fence and undertake planting on streams leading to Pouarua Lake and to eradicate wild pines and gorse.

Pengxin also intended to construct a publicly available underpass on the Taupo-Napier highway and was committed to keep employing all 20 staff working the property, Romano said.

Lochinver runs sheep, beef and dairy cows and Romano said the mix would probably be tweaked.

"We might do a little less beef and a little more dairy. It'll be a little bit initially, but we might do more as time goes on."

The political backlash had not deterred Pengxin, Roman said..

"We do like the sector and are prepared to invest. We are developing a brand name as a good custodian of the land, and if another opportunity comes up that makes sense for us we'd like to be part of the process," he said.

The proposed purchase has emerged as a hot election issue, with Conservative Party leader Colin Craig breaking news of the planned sale last week in an attack on foreign investment.

"It's time to take down the 'For Sale' sign on New Zealand," Craig said.

In the wake of the news the Labour Party, NZ First and the Green Party announced they would tighten foreign investment rules if they were in government after the election.

New Zealand Initiative managing director Oliver Hartwich said New Zealand had always been a capital importer and foreign investment was invariably positive for the economy.

The debate was "ironic" given even communist Cuba was encouraging capital flows, Hartwich said.

"Raul Castro just gave a speech in April praising foreign investment's role in the economy. You couldn't imagine any politician here – whether ACT, National or Labour – saying these things, but Castro did," he said.

Hartwich said his think tank's research had found most foreign investment in New Zealand was from Australia, and the proportion from China was "really negligible".

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Shamubeel Eaqub, principal economist for the New Zealand Institute for Economic Research, said opposition to foreign investment was mostly emotional.

"There's this view that even though foreign buyers have injected all this money in by purchasing an asset, suddenly this money has disappeared," he said.

Lochinver Station's owner, the Stevenson Group, said farming was no longer part of its core business and proceeds from the sale would be used to kick-start its South Drury industrial development.

Stevenson Group chief executive Mark Franklin said the South Drury project could employ up to 8000 people.

The OIO was unable to give a time frame for when it would make a decision on the Lochinver deal, but pointed to figures showing similar applications took an average of 90 working days to assess.

- Stuff

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