CASHED-up agribusiness companies that sold their low reliability water to the Federal Government are back in the market to replenish their supplies.
Mildura's Tandou Limited sold 250,000 megalitres of supplementary water for $34 million to the NSW and Federal Governments on December 2 last year.
Yet last week the Tandou board announced it wanted to "expand its water portfolio" as part of its strategy to become a water trading house.
"We believe the Australian water industry displays characteristics that are attractive for investment, particularly, strong demand for water for a range of uses, combined with supply limitations due to climate change, conservative water management of water allocations and the buy back of water entitlement by the Commonwealth," the board announced.
Tandou's counterpart, Twynam, is also rumored to be back in the water market, with one broker stating it was "well known" the company was buying temporary water.
Twynam sold 240,000 megalitres of general and supplementary water entitlements to the Federal Government for $303 million last May.
A search of the NSW Water Access Licence Register shows Twynam sold its general security shares to the NSW Government for $1309 a megalitre, but retained its licence on the Murrumbidgee irrigation system.
Retaining its WAL allows Twynam managers to buy in temporary water to meet their irrigation needs.
Brokers told The Weekly Times it made far more sense to buy "real" water on the allocation or temporary market than retain general security entitlement on the Murrumbidgee that gained miserable allocations of 21 per cent last season (2008-09), 14 per cent in 2007-08 and 15 per cent in 2006-07 - an average rate of return of $33 to $50 worth of water on an entitlement worth $1309 a megalitre.
In contrast Twynam could buy a full megalitre of allocation water on the temporary water market for $200 to $300 a megalitre in most of those seasons.
Twynam executive chairwoman Christine Campbell refused to respond to The Weekly Times questions on the issue.
Tandou and Twynam's water trading strategies follow moves by US-owned Summit Water Holdings earlier this year to buy $20 million of Australian irrigators' water as part of its $500 million global water-purchasing strategy.
At the time, California-based Summit Global Management chief marketing officer Matt Dickerson said: "There were few areas where we can execute our strategy, but Australia is one of them".
