Growers told business as usual for bio-refinery

Queensland sorghum growers have expressed relief at news the Dalby Bio-refinery will continue to operate, despite it being placed into the control of receivers last Friday.

The Bio-refinery, Australia's first grains to ethanol refinery, was placed into voluntary administration last Friday with debts of $80 million.

Receiver managers Ernst and Young have indicated the plant will continue to trade as normal as assessments are made about the viability of the existing business and whether it will be prepared for sale.

Dalby sorghum grower Ross Skerman, who has a number of supply contracts with the bio-refinery, said he had been advised by the receivers yesterday that all payments to grain suppliers would be guaranteed.

"My understanding is that at this point in time they are honouring the payment of all grain contracts and are guaranteeing payment of any grain deliveries in," he said.

"I am just waiting for letters of confirmation before I deliver anything."

Mr Skerman said it was a relief to learn the business was still operating.

"Luckily we have no outstanding money, so there are no concerns there, but we have contracts to go in next month, and so it is a relief to be able to get them away," he said.

With the capacity to process 200,000 tonnes of sorghum into ethanol annually, the bio-refinery is one of the single biggest users of grain on the Darling Downs.

Mr Skerman said it would be a significant blow to local grain producers if such a large domestic user of grain was to disappear from the market.

"The domestic market is well up over one million tonnes in Southern Queensland, and the more we can keep that up the more we become insulated from the export market," he said.

"As soon as we have export grain we are competing directly head on with the American corn grower, and they are pretty darn efficient at producing corn.

"If we can use it here domestically we become disconnected from the American grower, and that is why domestic markets like the ethanol plant and feedlots are very important to us."

Fellow Dalby grower and AgForce grains director Wayne Newton agreed that the closure of the plant would hit local growers hard.

"It is a good solid market, they consumed about 200,000 tonnes a year, and if we were going to see 200,000 tonnes of grain suddenly come out of the market, it would be a great disappointment," Mr Newton said.

Mr Newton said most of Queensland's sorghum crop had been harvested and many growers had either already delivered their grain or had filled on-farm storages in the hope of an improvement in prices.

Prices were currently trading at the lower end of the range price between $160 and $180 a tonne, he said.

"The only thing that is holding prices up a little bit is the continuing dry weather in southern Queensland," Mr Newton said.

"There have been some reasonable areas of winter crop planted at Roma and west of Goondiwindi, but when you come back in on the Darling Downs itself very little wheat has been planted.

"I have heard a few feedlots are starting to change their ration over to part sorghum, based on the supply, because the winter crop planting has not been as significant."

News of the closure of the Bio-refinery began circulating throughout the grain trade from 4pm last Friday when receivers Ernst and Young began ringing suppliers to advise them of the administration arrangements.

The ethanol plant opened for business in December 2008 during a period of high grain prices.

The closure comes just weeks after the Western Downs Regional Council opened a new recycled water plant that was expected to supply water to the bio-refinery.

The Dalby Biorefinery’s website lists Ross and Chris Harrison and Mark and Tony Lowe, who operated fuel distribution businesses for over 25 years until the recent sales of their distributorships, as the sponsors of the Dalby Bio-Refinery Project.

The DBRL was formed in August 2002 as an unlisted public company established solely for the purpose of developing the biorefinery.

The website said the promotors saw an opportunity to blend ethanol with petrol when the then Howard Government launched its Government’s Cleaner Fuels for Australia policy in 2001.