MICHAEL GABOUR AND BRONWYN DWYER CEO, DAINTREE BIO PRECINCT LTD & SUBSIDIARY FAR NORTHERN MILLING PTY LTD
After a couple of weeks of ‘start and stop’ operations due to boiler issues and wet weather, the Mossman Mill is once again fully operational. During the 2019/20 off season, the Mill spent approximately $9.8M in maintenance and upgrades. The works included a partial boiler re-tube and an upgrade of the boiler drum level controls. The upgrade to the bagasse fired boilers will also reduce stack emissions. This work will result in improved reliability and factory efficiencies.
The 2020 crush started on 16 June but the Mill soon began to experience some teething problems with the new boiler controls. After three days of intermittent operations, the Mill made the decision to shut down in order to take the boiler off line to carry out repairs. A boiler technician was flown in to fine tune the controls. Management is confident that the Mill is now, and will remain, fully operational for the 2020 crush.
Last year, local cane growers regained control of the Mossman Mill, becoming the first grower group in Australia to buy back a sugar mill. The growers’ journey to purchase the mill started in March 2017 with the announcement by Mackay Sugar that they were divesting the Mossman Mill as part of a debt reduction strategy. Over the next 28 months the representative organisations for the growers supplying the Mossman Mill carried out due diligence and negotiated the purchase of the Mill. This purchase was completed on the 5th July 2019.
In order to carry out the due diligence the growers were asked for a voluntary contribution of 50c per tonne of cane. Through the current Offer Information Statement, the growers have the ability to take up shares to the value of their contribution in Daintree Bio Precinct (DBP). DBP is the parent company of Far Northern Milling Pty Ltd which ultimately owns and operates the Milling assets.
Douglas Shire Council was instrumental in the successful acquisition of the Mossman Mill providing both financial support and support through lobbying the State and Federal Governments to provide assistance packages to Far Northern Milling.
Far Northern Milling also acknowledges the efforts of Member for Leichhardt Warren Entsch in gaining the support of the Federal Government for this Project. The Federal Assistance Package provides funding for operation, capital upgrade and maintenance of Mossman Mill with the aim of increasing mill availability and sugar recovery. The upgrades are ongoing over a three year period with incremental gains in mill reliability expected each season. Federal support will also fund a significant stack emissions reduction plan.
The State Government has also provided an assistance package to aid the upgrade of the Mill as well as support for the transition to value adding. Advance Cairns and Regional Development Australia- Far North QLD and Torres Strait were also strong advocates for the grower owned Mill transaction.
This season approximately 817,000T has been contracted to Far Northern Milling with around 115,000T to be toll crushed at Tableland Mill leaving around 702,000T to be crushed at Mossman. Ultimately, the DBP would like to see at least 1M tonnes contracted to Far Northern Milling.
The Directors of DBP ascertained very early in the due diligence process that Mossman Mill is not economically viable as a stand-alone mill producing raw sugar for export onto the world market. This is primarily due to the fact that sugar is priced on the NY11 stock exchange which is extremely volatile. This volatility is due to the influences of the large sugar supplying countries such as Brazil, Thailand and India.
To reach the 1M tonne target, the Directors concluded that growers would require higher and more stable returns from their cane production. To achieve that goal, the Directors have established Daintree Bio Enterprises to create value added products.
The Daintree Bio Precinct is in the process of implementing a Program Management Plan which maps the pathway for the identified value adding projects and allows for the ongoing investigation of potential new projects. The DBP is currently engaged in commercial negotiations for a range of value adding initiatives, with the first projects targeted for delivery during the 2021 season.
Several short-listed projects have been identified and are at various stages of due diligence through the Program Management Plan. The process is being assisted by consulting firm KPMG which has expertise in conducting due diligence and financial modelling of the various options.
While scientific research to develop new “value-added” products is not currently a significant focus for DBP, the Directors have had several discussions with universities who are interested in piloting projects at Mossman Mill.
The State Government Assistance package provides funding towards the operation and capital upgrade of the Mill as well as funds for the transition to value adding on the Bio Precinct. As with all Government assistance packages funding is tied to a series of milestones and gates to ensure the progression of the project is measured and funds being expended in a prudent manner.
Correction to previous article, please note that the Mill is not currently including co-generation in its shortlist of projects.
As stated, the Hon.Warren Entsch, MP, supported the federal funding application for the Mill but it should be noted that Douglas Shire Mayor Julia Leu flew to Canberra to press the case for federal funding and met with the Prime Minister to explain the consequences of the Mill closing. Prime Minister Scott Morrison approved and released the funds.
It should also be noted that the Queensland Government has committed $25 million to the Mill as a result of intensive lobbying efforts by former Mayor Julia Leu and Cynthia Lui, MP for Cook.