Chinese interests have grabbed a sizeable chunk of Western Australia. Photo: Erin Jonasson

IT IS hard to tell exactly when the deal was done, but a group of Chinese businessmen have quietly put their collective foot on a block of land half the size of the Australian Capital Territory.

They did this by taking over a struggling company on the Australian Stock Exchange called A1 Minerals. They paid no takeover premium for control of A1 and they are now sitting on 1200 square kilometres of land via a company called Stone Resources, which is domiciled in Bermuda.

We are not talking prime CBD real estate here. It’s gold-exploration acreage near Laverton in Western Australia’s Yilgarn Craton. But there is a lot of it – and it raises the question: is anyone keeping tabs on Chinese and other foreign interests’ ”land-banking” activities in Australia?

Strangely, there hasn’t been a single mention of the Foreign Investment Review Board, whose job it is to approve foreign acquisitions, in the scant documentation about the A1 deal.

As far as federal agencies go, the FIRB is a secretive mob. If you venture into the CIA website, you will find all manner of interesting things about the US and the world. A visit to the FIRB website, however, will reveal little more than a few guidance notes and application forms, and a dry policy document or two. It sits within the federal Treasury Department but keeps an extraordinarily low profile and doesn’t publicly account for any of its decisions.

So how did this deal get done? It may well have passed completely unnoticed had it not been for a geologist and industrial chemist, Ian Crawford, who has offices in the Laverton district. Crawford noticed that A1 had changed hands.

”We asked the ASX about FIRB approval for the Chinese takeover of A1, only to be told by the ASX that the shareholders approved the takeover and to take our concerns to the FIRB,” Crawford told BusinessDay.

He did just that. Twice. ”And to the Treasurer, Wayne Swan … Nothing but the sounds of silence.”

As a geologist in the outback, Crawford sees a lot of ”land-banking” going on. Companies can get control of large tracts of land with exploration and minerals licences and sit on them for years.

There is no suggestion that Stone Resources does not intend to use its leases for exploration in accordance with the law but there appears to be a lack of oversight of foreign investment. In the case of Stone, it is a group of Chinese businessmen based in Hong Kong via an entity registered in the tax haven of Bermuda.

”Why can’t anyone answer my simple question? How did a wholly Chinese-owned business get to own more than 1200 square kilometres of prized ground without a full FIRB investigation?” Crawford says.

A look through Stone’s statutory announcements doesn’t make the picture much clearer either.

On March 12, A1 Minerals told the stock exchange it had ”become aware that three major shareholders of Stone Resources Ltd”, including one of its directors, had struck a deal with Superb Summit International Timber Company Limited ”to exchange their combined controlling stake in Stone for certain shares or convertible notes to be issued by Superb Summit”.

Superb Summit is a Hong Kong-listed company domiciled in the Cayman Islands, and Stone Resources a Bermudan-domiciled company listed on Canada’s Toronto Stock Exchange, whose Chinese shareholders include exotic names such as Tycoon Rich Holdings Ltd. It’s all very mysterious, and probably just a case of the Chinese trying to make a dollar by exploring for gold in WA.

They paid about $12 million and effectively extinguished A1’s debt to Queensland property developer Watpac. That $12 million in takeover value (bear in mind the shares are quoted around 0.01¢) is a tiny deal by ASX standards and probably comes in well below the FIRB threshold for approvals.

The threshold is $244 million for the acquisition of an Australian company by a non-US entity, or, as the FIRB website says, ”an interest in an offshore company that holds Australian assets or conducts a business in Australia”.

But who would know? Was approval required or sought? Did the ASX or ASIC have to report foreign acquisitions to the FIRB? How many approvals has the FIRB given for Chinese interests to buy Australian companies? How much Australian land is now controlled by Chinese interests? Has any register been made at all?

The FIRB has been unable to respond to questions from BusinessDay. The agency doesn’t even seem particularly accountable to the Senate. Nobody from the FIRB turned up at Senate estimates last week for the usual questioning, they just sent Treasury people.

An interesting aside in the saga is that the Chinese deal appears to have saved the skin of Watpac. A1’s debt to Watpac was not far short of Watpac’s full-year profit last year.

Stone is now lugging dirt almost 200 kilometres from Kookynie, dirt with head grades of barely 1.8 grams to the tonne. So there is work to be done before the Chinese get a return. And there is also work to be done at the FIRB – on transparency.

Stone Resources said FIRB approval for the transaction was granted on July 4, 2011.