Far Northern Milling issue sugar Mill funding ultimatum


Howard Salkow

Senior Journalist

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Far Northern Milling, who announced in July last year that it had entered into a conditional contract to purchase Mossman Mill from Mackay Sugar Limited, has issued an ultimatum that could see it walk away from the mill.

In a letter dated 29 May to Warren Entsch, the Federal Member for Leichhardt, Maryann Salvetti, Chairperson of FNM wrote: “The Board is tired of fighting and yesterday moved a resolution that if we cannot achieve the $? from the State funding for operations and cash flow, then on 14 June we will have no option but to walk away from purchasing the mill.

“We now leave the future of Mossman Mill in the hands of the Federal and State governments again and hopefully this proposal will be acceptable to both layers of Government.”

If  FNM does walk away on 14 June, it will have a devastating effect on the Douglas Shire. It will mean 160 people losing their jobs, 300 businesses closing, 500 people out of work and the entire Shire Council threatened.

Both levels of government came to the Mill’s rescue when they agreed to commit $25m from the State Government and $20m from the Federal Government. However, both parties have been at loggerheads regarding the funding, how it will be used, and questioning whether the funds have been made available.

From the outset, the State’s support was focused on the delivery of the bio-precinct, with the Federal funding designed to support ongoing operations to allow the transition to occur. This was fully supported by Far Northern Milling, according to the State Government.

In clearly stating her frustration with the State Government, Ms Salvetti says in her letter to Mr Entsch:

“As Chairperson of Far Northern Milling Pty Ltd, I write to you to explain the situation we find ourselves in and to personally explain to you the frustrations we are currently experiencing with the State funding announced last December for Mossman Mill.

“The FNM Board had always stressed to both the State Government and the Federal Government that the only way that we would be successful with Mossman Mill was to secure the following: 

  • $10m – Operation funding
  • $10m – Maintenance funding
  • $10m – Capital funding
  • $10 m – Project funding
  • $20m – Grower funding

“The Federal Government was quick to respond to the industry’s request and in October of 2018 committed the $20m of funding required to FNM to transition the mill.

“This was by way of Maintenance and Capital funding. Our preference was for operational funding and maintenance as we were negotiating with the state for Capex, but were told that we couldn’t access the funds for operational,” she writes.

She adds that: FNM continued to meet with representatives of State Development Manufacturing, Industry and Planning to pursue the remaining funding from the State Government and it wasn’t until we finally had the opportunity to meet with Minister Cameron Dick in early December that funding was offered by the State.

“Prior to that meeting certain public servants were determined not to approve any funding for Mossman Mill and negotiations were a nightmare. We were very appreciative of this result and signed a Heads of Agreement with the State which would lead to contracts being available to FNM to access the funding when a number of CP’s had been met.

“We were led to believe that these conditions had been met and that the release of the first tranche would commence to assist to resource FNM to get to final investment decision (FID). An agreement was eventually sent to FNM but has not been signed to date due to a number of unresolved issues which the State had placed on FNM,” she says in her letter.

But the battle between the State and the Federal Government continues and is highlighted by a statement today out of Mr Dick’s office, the Minister for State Development, Manufacturing, Infrastructure and Planning.

“The State’s position is that Warren Entsch must make his money available for wages and other costs as he promised in a media report on 15 February. 

“On day one of the mill’s operations under the new owners, they will need money to pay wages and other operational costs, and that’s what Warren promised.

“The State Government’s funding has always been for capital and maintenance, towards the creation of a new bio-precinct for the production of biofuels. Heads of agreement were signed on 24 December, 2018 with Far Northern Milling and the State.

“At the request of the mill, Minister Dick has agreed to consider the earlier release of funding for capital and maintenance to assist the mill, on the sole condition that Warren Entsch keeps his promise to wages.

“State Government officials are working closely with the Mill operators and the Federal Government to ensure a positive outcome,” the statement said.

But Mr Entsch has made assurances that the money has been signed off. “The money has been signed off. I can assure you the contracts have been signed,” said Entsch, who has continually said the Federal Government would honour its commitment to the Mossman Mill.

And in an interview yesterday with the ABC, Ms Salvetti confirmed that the $20m from the Federal Government had been secured and signed off.

“I am pleased it’s in place. There are no issues. We will put in an invoice and we’ll get the funds,” she said.

Far Northern Milling has significant plans if they take over the mill. The proposed bio-refinery is a major component of their plans when they take over the mill from Mackay Sugar.

A bio-refinery is a facility that integrates biomass conversion processes and equipment to produce fuels, power, and value-added chemicals from biomass.

The bio-refinery concept is analogous to today's petroleum refinery, which produce multiple fuels and products from petroleum.

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