Canegrowers Mackay annual meeting in progress Tuesday.
Canegrowers Mackay annual meeting in progress Tuesday. Tony Martin

Infrastructure fund could ease Mackay Sugar woes

MACKAY Sugar could consider tapping into the Federal Government's multi-billion dollar loan facility to alleviate crippling debt.

During the Canegrowers Mackay annual general meeting on Tuesday, cane grower Des Paul pointed out that as energy company Adani had applied to the $5b Northern Australia Infrastructure Facility to build rail lines, the sugar milling company should also be eligible.

The company reported a net debt in the 2015-16 financial year of $212m.

Minister for Northern Australia Matthew Canavan, guest speaker at the meeting, supported the idea, stating that if there was an appetite for Mackay Sugar to apply he would be willing to promote it.

So far there have been more than 90 enquiries to the $5b Northern Australia Infrastructure; projects at varying stages of development and assessment.

Mackay Sugar chairman Andrew Cappello said the company was considering all its options going forward and it was yet to decide if it would apply.

In the meantime, he said, company employees would be carefully considering a draft report from capital raising firm Kidder Williams in detail, before reporting back to growers.

Talks at the meeting also centred on milling company Wilmar and Queensland Sugar Limited's failure to negotiate an on-supply agreement, which will be required to offer grower's choice in who markets their sugar in the 2017 season.

Mackay Canegrowers chairman Kevin Borg said if negotiations remained at a standstill, the region would have no other option but to go to arbitration. But, as with court proceedings, commercial arbitration can take more than a year to resolve. Mr Borg said it was not yet clear what would happen if arbitration was triggered and 2017 contracts could not be finalised.

"That's a very good question. I guess there's rolling agreements and that sort of thing,” he said.

He also believes Wilmar may have been trying to buy time in the hope that the current State Government, which does not support the sugar marketing legislation, would dump it.

While Senator Canavan acknowledged some wanted the Federal Government to step in and resolve the issue, "it had not yet responded to that request”.

Wilmar did not respond to request to comments.

More in Thursday's Rural Weekly