$115million bid for mill
THE jury is out as to whether the Proserpine Sugar Mill will be sold to Singapore owned company Sucrogen for $115m.
The deal was announced on Friday and if it goes ahead, the mill, which has been owned by the growers for 80 years, will be handed over to Wilmar International Limited’s Australian-based sugar subsidiary, Sucrogen.
The mill’s 214 growers will ultimately have the final say on the sale and at least 75 per cent must agree before they can proceed.
Mill chief executive John Power said the board was trying to ensure sustainability in the sugar industry for the region and had looked at a number of options before agreeing on the Sucrogen offer as the best.
"We believe we need to be in a group of mills which will help share economic risks," he said.
"Within three years it is going to be a completely different situation [for the industry] and being a single mill on its own is going to be a very risky place to be."
Mr Power said if the mill joined with Sucrogen, the growers would then be part of more than 2000 growers who could work together and ensure stronger bargaining power.
He also said Sucrogen had the ability to invest in more land and increase the sugar production in the region.
"They are committed to bringing their mills up to [crushing] capacity," he said.
"This is all big news for a community the size of Proserpine.
"This would produce a very strong local economy."
The mill currently crushes 1.7 million tonnes of cane but has the ability to crush about 2 million.
The growers are now waiting on an independent report of the sale before they make a decision.
Farmer Tony Hinschen said he was disappointed there hadn’t been more communication between the board and the growers before the deal was announced.
"That was probably a big shock to everyone in the room on Friday [when the announcement was made]," he said.
"We have been a co-operative for such a long time now.
"It is something that was held close to growers’ hearts."
Mr Hinschen said he knew it had been a tough year for growers and the mill was in a lot of debt but he was unsure what the final decision would be.
"It was probably inevitable that our co-operative would eventually have to go with outside investment," he said.
"There are probably some growers out there that would like some money out of it for retirement and that sort of thing."
He said the sale could bring better opportunities for the growers as well.
"There is a positive with this that selling the mill will bring more investment into the area," he said.
"There is a possibility of more investment in our infrastructure and an expansion of our mill area.
"It does make a big difference if the mill crushes over two million tonne- there is a lot of money to be made.
"But I hope the mill doesn’t think they have stitched up a deal with Sucrogen and that the growers are happy with their performance.
"It is a grower-owned mill but the growers don’t really have a say in what happens because they vote the directors in."
Mackay Sugar chair Andrew Cappello said he was disappointed Proserpine Sugar Mill had gone in the direction of Sucrogen.
"We firmly believe Mackay Sugar’s long-term vision of creating an Australian grower-controlled sugar entity would provide a better outcome for the Proserpine growers," he said.
"It is very disappointing to hear that the Proserpine board has taken the business in this direction, but the decision is ultimately with Proserpine shareholders."
Sucrogen currently owns and operates seven sugar mills in North and Central Queensland and produces almost half of Australia’s total raw sugar supply.