Bombshell report reveals perfect storm behind Mossman Mill woes

Major machinery failures, critical labor shortages and a direct lightning strike that took out a key generator have been revealed as reasons for Mossman Mill posting an operating loss of $5m this year, before taking into account government funding.

The Mossman Mill reported major issued that impacted production of sugar in 2022.

A sugar price at an all-time high and millions in government funding has not been enough to haul the beleaguered Mossman Mill out of the red amid a perfect storm of major machinery failures, critical labor shortages and a direct lightning strike that took out a key electrical generator.

In a building crisis for the mill, poor sugar production and losses in the millions came to a head on Monday when the parent company behind Far Northern Milling, Daintree Bio Precinct, entered voluntary administration.

It’s hoped a series of meetings in the coming days will deliver certainty for mill workers potentially facing unemployment and growers looking down the barrel of major losses, estimated at $10m, after preparing fields for the 2024 season.

For at least the past 18 months the mill has been totally reliant on government funding.

According to documents obtained by the Cairns Post, Far North Milling logged an operating loss before government funding of $5,112,000 for the year ending May 31, 2023 and a greater amount of $7,616,242 for the year ending May 31, 2022.

Providing for income tax and government funding, the mill posted a loss of $286,974 in 2023 and a profit of $907,508 in 2022.

Mossman sugar mill, built in 1896, crushes 500,000 tonnes of sugar cane annually. A cooperative of 110 local cane growers bought the mill in 2019. Picture: Brendan Radke

In notes attached to Far North Milling’s financial statements dated September 14, 2023, the company said a range of critical factors including sugar price, cane throughput, successful implementation of value adding projects, opportunities to improve mill efficiency and grower and community support “gives rise to material uncertainty that may cast significant doubt over the company’s ability to continue as a going concern”.

“If the company is unable to continue as a going concern, it will be required to realise its assets and discharge its liabilities,” the report said.

Daintree Bio Precinct received $20m federal funding and $25m state funding to enable Mossman and Tablelands sugarcane growers to transform the mill into a bio-refinery in 2018 following the divesting of the mill by Mackay Sugar Limited.

It’s understood Mackay Sugar was unable to contend with debt of more than $180m.

Far North Milling reported a critical shortage of truck drivers during the 2022 crush.

Last year the mill was plagued with problems including a one week delay to the crush which Far North Milling blamed on the Department of Transport Main Roads for not supplying rego plates for a trailer.

The season didn’t get better, and in week one a major failure of the Brotherhood shredder turbine left the mill operating at reduced capacity for the rest of the season.

Higher than budgeted overtime due to a mill worker labor shortage chewed into the bottom line and transport contractor Logitrix Management Services was also impacted by a “critical” labor shortage.

Then in October 2022, a direct lightning strike took out the 6MW generator and the mill operated on a generator half the size and a hired diesel unit.

According to the report the lightning strike cost the business about $1.8m.

Far Northern Milling Directors, Rajinder Singh, Maryann Salvetti, Don Murday and Liza Giudice Picture: GIZELLE GHIDELLA

Mossman Canegrowers manager Evelyn Matthews said mill staff had done their best to keep the factory going.

“As growers we were part of buying the mill and I know the people involved in that worked extremely hard to get it across the line,” she said.

“They have not necessarily communicated everything to everyone but have done their best to keep the mill operational.”

A stakeholder meeting scheduled for Tuesday afternoon, in Mossman, was attended by state government representatives, local Canegrower board members, Far North Milling executives and administrator, John Goggin of Worrells and Canegrowers chief Dan Galligan joined the meeting via Zoom.

Mr Galligan said while the situation was “disappointing” for growers supplying the Mossman Mill the appointment of an administrator was a necessary step given the company’s ongoing financial struggles.

“Growers have already invested over $10m in the upcoming 2024 season, and they haven’t been fully paid for the 2023 season,” he said.

“The closure of the mill would be devastating for sugarcane families in the region.”

Mr Galligan encouraged administrators to remain in constant communication with the industry so that local growers can have clarity on any decisions that could seriously impact their livelihoods.

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Originally published as Bombshell report reveals perfect storm behind Mossman Mill woes