CSR Limited (CSR) announced today that it is in the final stages of commissioning of operations at the new 63 megawatt renewable electricity plantat Pioneer raw sugar mill in the Burdekin River District, North Queensland. The mill began processing sugarcane in mid-August while commissioning of the renewable electricity plant is expected to be completed over the next two weeks.
Construction delays and significant rainfall throughout the North Queensland region over the last month postponed completion of the project, originally targeted for June 2005.
Fuelled by sugarcane waste fibre,the project will increase CSR’s total renewable energy production by almost 80% to 620,000 megawatt hours per year which is enough electricity to supply the requirements of 100,000 households.
The delayed completion of the project has increased the total capital cost from $140 million to approximately $150-$170 million, subject to the resolution of contractor claims. Plans are being developed to operate the plant all year round to boost returns.
The unseasonable wet weather in North Queenslandwill result in more of the sugarcane crop being crushed in thesecond half of CSR’s financial year ending 31 March 2006. This will significantly shift Sugar division earnings from the first half to the second half of the financial year.
The outlook for the sugarcane crop remains at levels similar to last year. However, if the unseasonable wet weather continues and some sugarcane is unable to be harvested prior to the start of the traditional rainy season in mid-December, the full year result could be impacted.
Increased operating costs due to the wet weather and the delayed start of Pioneer mill are expected to be offset by higher raw sugar prices, now expected to be in the $265-$285 per tonne range with 65% of the raw sugar crop priced for the year.
As aresult, CSR maintains its guidance for the Sugar division that the full year operating result should be broadly in line with last year, adjusted to comply with Australian equivalents to International Financial Reporting Standards.