One billionaire adding beef cattle to their mining interests is a curiosity. Two is a stampede.
In Australia, that’s just what has happened with the country’s richest person, Gina Rinehart, spending an estimate $40 million to buy a half share in two cattle-breeding properties covering 1.1 million acres of the Kimberley region in the country’s north.
Rinehart is following in the footsteps of Andrew Forrest, one of her rivals in the iron ore business, who invested an estimated $30 million in May to buy Harvey Beef which has extensive farming and processing interests in the south of Western Australia.
Both billionaires (Rinehart is worth an estimated $18.2 billion and Forrest $4.4 billion) have most of their fortunes tied up in the production of iron ore, the price of which has been falling thanks to its heavy dependence on demand for steel in China where a construction boom is slowing.
Fading Iron Ore Demand, Rising Food Demand
Neither Rinehart nor Forrest has described their move into farming ventures as a way of trimming their future exposure to iron ore, but that’s a reasonable interpretation thanks to the flattening outlook for iron ore demand.
Earlier this week the investment bank Goldman Sachs reaffirmed its cautious outlook for the iron ore price, tipping a five-year slide to around $80 a ton, down about $18/t on the latest price for high-quality ore landed in China.
The decline in the price of iron ore has been expected thanks to a strong increase in production as producers rushed to meet demand from China.
With the outlook for most minerals more cautious mine expansion plans are being shelved and alternative investment options brought forward with a favorite being supplying food to China.
For the rest of this article, click here: http://www.forbes.com/sites/timtreadgold/2014/07/17/mining-magnates-to-beef-barons-the-new-focus-for-two-australian-billionaires/