As the debt crisis facing Australia’s second largest sugar miller unfolds, the company has announced it will sell one of its mills.
Mackay Sugar has moved to offload a number of assets and it has recently announced that will include one of its most recent acquisitions, the Mossman sugar mill in Far North Queensland.
The purchase of the mill five years ago was seen as an economic lifeline by growers in Mossman, who for years had faced uncertainty about the mill’s future viability.
Now, however, the tables have turned and it is Mackay Sugar with a cash flow problem.
Chairman Andrew Cappello has revealed he has started talks with far-north Queensland growers about the possibility of them buying back the mill.
Mr Cappello was not yet willing to disclose a price tag, but said behind closed doors his proposal was being seriously considered by growers further north.
“I guess the Tableland people are seeing this as an opportunity to take ownership and some control of their destiny, so they are quite keen to get into the process of looking at how they can achieve that,” he said.
“Mossman people probably do not have as many opportunities or options open to them … they have been there before, they have owned a mill in the past, and they are happy to work with the Tableland people.
“The process from here is that we need to form a reference panel that will sit down with us and Kidder Williams and look at the opportunities and the processes that we need to allow that mill to be purchased by the northern growers.”
Chairman of Canegrowers Mossman, Drew Watson, said it was disappointing that Mackay had decided to exit.
“But we do not know who the new owners are going to be, it be someone else or even the growers,” Mr Watson said.
“We have been told we may have an opportunity to maybe buy the mill back ourselves but we have to do our due diligence on that.”
Tableland growers the key to any decision
The Mossman Sugar Mill was the last independent mill to be sold in far-north Queensland.
Drew Watson said the only way it could be returned again to grower ownership was with Tableland growers coming on board.
They have been sending about half a million tonnes of cane to Mossman since a falling out with the owner of their own sugar mill in 2013.
“They are the key to it all, unless they want to send that cane down, then Mossman growers are back to that small, 600,000-tonne mill again, which makes it a bit of a struggle,” Mr Watson said.
He believed the only other logical buyer was MSF Sugar, the owner of the Tableland mill.
However he admitted that would be difficult given the recent history between the Thai-owned milling company and growers.
Canegrowers Tableland have not yet commented on the proposal to buy back the Mossman mill, although the decision to sell would be a blow to those who advocated sending cane to a rival miller, a deal which was not always plain sailing.
‘This is not a fire sale’
In the initial years, the ageing Mossman mill struggled to cope with the increased tonnage going across its rollers, causing financial pain to growers and also the new owner which was forced to spend millions bringing the factory up to speed.
That proved contentious for other Mackay shareholders, some of whom felt the money would have been better spent on the company’s existing mills.
However, Mr Cappello said the company stood by the decision to invest in Mossman Mill, and was adamant the proposed sale was not a “fire sale”.
“No, it is not a fire sale … we want to make sure that those guys have every opportunity to have some control over their destiny, we are not going to leave them in the lurch,” he said.
“We are keen to work with them to consider options they put on the table as to how this transition can take place.”