Deborah Snow and Debra Jopson
September 4, 2010


Brisbane Times


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.

Full article here