The sale of 1.3 per cent of Australia's total land mass to foreign investors has been blocked, but the country's largest private landowner is determined to overcome government concerns and complete the sell-off.
Treasurer Scott Morrison blocked the sale of S Kidman and Co Ltd on national interest grounds because one of its stations, Anna Creek, is located on a weapons testing range.
Anna Creek, Australia's largest single property holding, has around half its pastoral lease in the Woomera Prohibited Area weapons testing range in South Australia.
"My decision is based on the national interest and the national interest relates to defence interests, other strategic interests," Mr Morrison said on Thursday.
Prime Minister Malcolm Turnbull said the WPA is called a prohibited area for a reason.
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"It is actively used for weapons testing and trials and it's an area that obviously raises national security issues," he said in Manila where he has been attending the APEC leaders summit.
Kidman's chief executive Greg Campbell said he was surprised by the rejection, but said the treasurer appears to have left the door open for reapplications.
He is lining up meetings with Commonwealth government representatives to try and understand their specific concerns and how they might be addressed.
"Whether accommodating those concerns can be achieved without too much compromise to the productivity and therefore the value of the business ... remains to be seen," Mr Campbell said.
"Obviously carving out part of the Woomera rocket range or all of it ... might be an option.
Encouraging further Australian interests into the bid structure might also be acceptable.
Mr Turnbull said there were a number of potential foreign buyers for Kidman, not just from China.
Kidman has 10 cattle stations in SA, WA, Queensland and the Northern Territory covering 101,411 square kilometres - equating to 1.3 per cent of Australia and 2.5 per cent of its agricultural land.
"When you have holdings as large as that, that does tend to limit the pool of purchases that are available and obviously limit the pool of any potential Australian purchases that might have been available," Mr Morrison said.
National Farmers Federation boss Simon Talbot said foreign investment in agriculture is always a sensitive matter, but he estimates $1.2 trillion of investment is needed in the next 40 years.
"Agriculture is on the cusp of its boom cycle, but the need for capital investment is a significant roadblock to growth," he said.
Opposition Leader Bill Shorten said while he had concerns over the Kidman sale, the government needed to be careful what message it sends to foreign investors.
Agriculture Minister Barnaby Joyce said Mr Morrison's decision was "unremarkable", particularly given a lot of countries don't allow foreign investors to purchase land at all.
But independent senator Nick Xenophon said the decision highlights the need for an urgent overhaul of foreign investment rules and laws.
He questioned the decision to allow the Port of Darwin to be leased to a Chinese-owned company for 99 years, while blocking the Kidman sale.
