CSR Limited has signed a Memorandum of Understanding with Cheil Jedang Corporation of South Korea for the sale of the Ord Sugar Mill at Kununurra. in Western Australia.
P.T.CSI, Cheil Jedang Corporation's fermentation plant in Indonesia, has been the main customer for the Ord Mill's raw sugar output and would take a major share in the purchase of the mill. The sale provides Cheil with the opportunity to integrate raw sugar production into its existing sugar refining and downstream processing businesses.
All of the CSR employees at the Kununurra Mill (capacity 60 000 tonnes sugar p.a.) will be offered employment with the new owners.
The transaction is expected to be completed by the end of May. The sale price was not disclosed.
CSR Managing Director Peter Kirby said the sale to Cheil was in line with CSR’s stated intention of concentrating its raw sugar milling operations in the lowest cost regions of Australia and ultimately, overseas.
“As previously indicated, our plan is to separate our sugar business from CSR at some point over the next two to three years when we are confident of obtaining fair value for our shareholders.
“Today’s transaction is not an indication that we are progressing this plan any faster; rather that in the immediate future, in the face of the current low world sugar prices, we are keen to focus on our lowest cost, most efficient operations.
“We are particularly pleased that today’s sale has been made to a long term customer of the mill, and that our employees will be transferring to a company with a long term relationship with the Ord region and a sound understanding of the sugar industry.”