NZ co-ops have been getting a bad media rap lately. Take Fonterra, for example. Andrea Fox, one of the country’s best-informed journalists specialising in agriculture issues, started a new series in the NZ Herald with the headline: “Fonterra: Disappointment and soured dairy dreams”.
Noting the dairy goliath had a silver-spoon birth nearly 18 years ago she wrote:
“Today the co-operative is looking a bit like the family’s overweight, lazy teenager hogging the remote on the biggest couch in the room And the credit card bills are coming in”.
After Fonterra posted a historic first net loss of $196m, Fox says calls are heating up for the company to be split up and a company, perhaps listed, spun off it, open to outside capital investment to chase high-value product markets. One of the country’s investment gurus, Brian Gaynor, says even major shareholders are telling him it’s time for change.
What Fonterra needs, as Point of Order sees it, is something of the spirit that has made Wesfarmers one of the great, thrusting businesses in Australia.
The Perth-based conglomerate started off as a farmers’ cooperative in 1914 and is now one of Australia’s largest employers, with a shareholder base of about 490,000. Some New Zealanders might know it as the owner of Bunnings or Kmart.
This week Wesfarmers was on a new path, launching a $A776m takeover bid for lithium miner Kidman Resources whose major asset is a 50% stake in a lithium project in Mount Holland, Western Australia, consisting of an under-construction mine and a lithium hydroxide refinery in Kwinana in Perth.
Lithium is an important component in the batteries used in electric vehicles, and Wesfarmers said it wanted exposure to the growing demand for that resource driven by the rising uptake of electric cars around the world.
The offer announced on Thursday morning, which comes hot on the heels of Wesfarmers’ $1.5 bn bid for rare earths miner Lynas, has won the backing of Kidman’s board and its joint-venture partner.
Wesfarmers chief executive, Rob Scott, says the company’s bid for Kidman Resources is not a replacement for its failed $1.5 billion tilt at rare earths miner Lynas.
“We see Kidman and Lynas as two very independent opportunities, separate opportunities and we’ll consider each separately. Our initial work analysing opportunities in the lithium space goes back many years”.
No wonder Bill English, when he finished as Prime Minister in NZ, leapt at the chance of joining the board of Wesfarmers. The rewards of being engaged in such an exciting business – we may supposed – are very satisfying.