Foreign bid for slice of sugar
FOREIGN companies are rushing to pour money into our sugar industry to secure a substantial slice of its sweet profits.
Investments from Chinese food group COFCO and Singapore company Wilmar, which last year bought Sucrogen, have thrown the struggling industry a lifeline; however cane growers are concerned about the potential loss of grower ownership and profits.
The companies have been quick to sink money into one of the biggest sugar industries in the world and are already planning to pour more in to ramp up production and profits.
Since buying Sucrogen late last year, Wilmar has moved to increase cane-growing areas in all three of Surcrogen's milling regions, including the Plane Creek Mill area south of Sarina.
Sucrogen Grower and Community Relations General Manager John Pratt said the company's focus was to acquire land to increase cane supply to its mills.
Mr Pratt said Sucrogen had purchased about 770 hectares of land south of the Plane Creek Mill to lease to cane growers from its supply area.
It was also looking to purchase the Proserpine Mill to expand its operations; however mill members rejected the company's $115 million takeover bid.
The no-vote opened the door for a renewed takeover bid from Tully Sugar, a company owned by Chinese food group COFCO, which has been working behind the scenes to secure a deal.
Keith De Lacy deputy chairman of COFCO Australia said the Proserpine Mill was an attractive investment given the land around it which was available to produce sugar.
"We would certainly like to ensure that we are growing enough to have the mill operating at its maximum (2.4 million) capacity," he said.
Mr De Lacy said Tully Sugar's second objective, if its bid was successful, would be to increase the mill's production capacity.
"We believe that if we are successful it will be good for the region, for the mill and the canegrowers," he said.
While foreign investment is nothing new in the sugar industry, the rate at which foreign companies have been pouring money into the industry has caused some concern among canegrowers.
Mackay Canegrowers chairman Paul Schembri estimated about 60% of Australian sugar milling assets had been acquired by foreign companies in the last six months.
This had caused some concern about grower ownership, control and profits, he said.
Tully Sugar's offer to take over the Proserpine Mill involves refinancing $100 million to repay Proserpine's loans and provides immediate working capital, effectively removing the mill's risk of going into administration.
Sucrogen's offer for the mill is still on the table; however it is unlikely to make any new offers.