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Thursday, February 15, 2024

A new type of high-stakes agricultural land sale is emerging, and it’s making millions by selling ‘highly problematic’ investments

Two Northern Territory cattle stations have been put up for sale, with a specific buyer in mind: companies with a large carbon footprint.

If it goes ahead as planned, the estimated $100 million-plus deal is believed to be the first of its kind.

In 2022, Maryfield and Limbunya stations were bought ↗ by Sydney-based investor Sam Mitchell ↗ from WeathCheck, with AAM Investment buying the 50,000 head of cattle and entering a long-term lease to run the pastoral operations.

The pastoral lease for Maryfield, 530 kilometres south-east of Darwin, sold for $38.2 million and Limbunya, 900km south-west of Darwin, sold for $65.2 million.

After registering carbon projects on the properties, Mr Mitchell is now offering for sale both the land and its potential to generate about 10.4 million Australian Carbon Credit Units (ACCUs) over 25 years.

Limbunya Station, including its impressive gorge, last sold for $65.2 million.(Supplied: LAWD)

“I’m not aware of something of this magnitude being put to the market in this way before,” said selling agent Danny Thomas.

The properties, which combined cover 620,000 hectares, are being sold with AAM’s long-term lease in place so potential buyers would not have to manage the cattle operation.

“We’re looking for someone to come and be an investor in the carbon project, or just an investor in the land, or take on 100 per cent of both properties,” Mr Thomas said.

“I would say this could be the beginning of a wave of new investment coming into agricultural land, where people see it as a way to deal with carbon.”

Future value of carbon credits to be tested

Cattle at a watering point on Maryfield Station.(Supplied: LAWD)

Mr Thomas said he expected a “recovery of that value for the land”.

“Then it’s a matter of what somebody sees as the present value for the benefit of the future ACCUs during that [25-year] creating period,” he said.

“There’s been some mathematics done around that, based on what’s got a face value of, say, $400 million for 10 million-plus ACCUs.

“But those ACCUs aren’t there yet — they are generated over the creating period ↗.

“So it will be the sum of money someone pays to step into those today for the benefit of receiving them in the future.

“But it will be many tens of millions of dollars.”

Mr Thomas said the properties would be marketed to companies with a large carbon footprint, like oil and gas companies or mining businesses, as well as third-party traders of ACCUs.

The ACCU Generic Spot Price as of February 13 was $36.15.

Questions about Human Induced Regeneration

Maryfield and Limbunya Stations have both been registered for Human Induced Regeneration (HIR) projects — where the landholder makes changes to allow vegetation on the property to regrow and store more carbon.

Some HIR methodology projects have been criticised by carbon industry figures ↗ for inflating the amount of carbon they sequester.

Former chair of the Emissions Reduction Assurance Committee, Professor Andrew Macintosh, said many HIR projects in Australia’s rangelands were “highly problematic”.

“Given where these projects are located and how [little] of the properties have been cleared, it is very unlikely … that the amount of carbon that they’re claiming is going to be sequestered in regenerating forest is actually going to occur,” he said.

“The projects are supposed to involve reducing grazing pressure in order to induce regeneration of even-aged native forests.

“But 70 to 80 years of high-quality science in Australia’s rangelands has shown that grazing does not have that sort of effect.

“Grazing does not result in a substantial reduction in the amount of tree cover in these areas.

“The general rule is that grazing has negligible impact on tree cover, or it can result in increases in tree cover — which is diametrically opposed to what 470 projects are claiming is happening.”

Maryfield Station has one of the largest feedlots in the Top End.(Facebook: North Star Pastoral)

However, a 2023 independent review into the carbon credit scheme rejected criticisms ↗ that it was fundamentally flawed.

Professor of Sustainable Agriculture at the University of Melbourne, Richard Eckard, said while HIR projects could work, the whole property’s emissions should be taken into account before ACCUs were sold.

“The [agricultural] land sector as a whole is going to struggle to get to their net zero target in their own right,” he said.

“So this idea that there’s all these surplus carbon credits is probably not right.

“You could argue that what should happen here is the [cattle station] itself should be net zero before they sell carbon credits.

“In other words — what is their plan to get the property to net zero emissions by 2030 or 2050?”

Stories from farms and country towns across Australia, delivered each Friday.

Posted , updated 

Michael Maren
Michael Maren
Former marine biologist who likes to spend as much time in the tropics as possible, due to a horrible time I once had in Alaska. Brrrr.

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