CSR COMMITS A$100 MILLION TO BECOME A MAJOR AUSTRALIAN PRODUCER OF GREEN ELECTRICITY

CSR Limited is set tobecome one of the largest producers of new renewable energy following thecompany’s announcement today that it will build a A$100 million “greenelectricity” plant in North Queensland.

CSR is to constructelectricity generating capacity of 63 megawatts at its Pioneer raw sugar millat Brandon, in the Burdekin River District, south of Townsville. The process will be fuelled by sugarcanefibre, known as bagasse, which is produced in substantial quantities as part ofthe sugarcane milling process.

The Pioneer mill projectwill be completed by June 2005, in time for that year’s sugarcane harvestingand milling season. With this projectCSR will be producing about 12% of Australia’s target for increased renewableenergy production. As well as providing revenue from the commercial sale ofelectricity, the project will earn tradeable renewable energy certificatesunder the Federal Government’s Mandatory Renewable Energy Targetlegislation.

As part of this investment, CSR has entered into a 10-yearpower supply agreement with Queensland Government-owned electricity retailerErgon Energy Pty Ltd.

The contract, which locks in firm prices for electricity and renewableenergy certificates, will help meet Queensland’s future electricity needs,especially in North Queensland. Electricity demand in this region is growing by3.5% a year – Australia’s fastest growth rate.

This investment will alsomake the mill more efficient and improve CSR’s processing capabilities forlocal sugarcane growers.

CSR Managing DirectorAlec Brennan said, “This is an exciting opportunity for CSR to deliverattractive returns for shareholders. The project is expected to produce returns above its cost of capitalfrom the first year of operation.

“Increasing renewableenergy production will help reduce the impact of movements in the world sugarprice on CSR’s sugar business by providing significant, stable revenue tocomplement and strengthen our sugar milling business.

“The investment is inline with our strategy to develop low risk growth projects allied to ourexisting businesses,” said Mr Brennan.

About 80% of the new plant’s power capacity will be soldinto the Queensland electricity grid, with the balance being used to power theupgraded sugar mill. The project will significantly increase the renewableelectricity exported by CSR from 150,000 to 350,000 megawatt hours per annum.

CSR is already a significant producer of renewable energy,currently operating a 50 megawatt plant at its Invicta sugar mill, also inthe Burdekin District. All of CSR’sseven sugar mills, like others in the industry, produce power from wastesugarcane fibre to drive the mills. The Pioneer mill project dramatically liftsthe efficiency of the process to allow more power to be sold into thegrid.

Mr Brennan added thatthere are opportunities to develop similar projects at several other mills tocontinue to grow this business. Theviability of these projects will be enhanced with further progress on the sugarindustry legislative reforms.

Helping to meet Australia’s renewable energytargets

Mr Brennan said,“Renewable energy production provides significant growth opportunities forCSR’s sugar business while generating electricity in an environmentallysustainable way. The Pioneer projectwill help ensure Australia’s renewable energy targets are met, reducing thenation’s reliance on fossil fuels.

“Generating energy fromwaste sugarcane fibre is well-understood technology for CSR. This is a natural extension of our expertiseof 130 years in the sugar milling business.’’

4 September 2003

For further information, please call Alec Brennanon +61 2 9235 8099 or Andrée Taylor on+61 2 9235 8053 or 0419 476 588.

News release: CSR commits A$100 MILLION TO BECOME A MAJOR AUSTRALIAN PRODUCER OF GREEN ELECTRICITY

BACKGROUND INFORMATION

CSR, Australia’s largest sugar company,manufactures about 40% of the nation’s raw sugar. The company also has a 50%interest in refined sugar joint ventures, which are the leading suppliers inAustralia and New Zealand. Other sugar related activities include distillingethanol.

The sale of greenelectricity complies with the Federal Government’s Mandatory Renewable EnergyTarget legislation. As part of its renewable energy strategy, a MandatoryRenewable Energy Target (MRET) was introduced in 2000 to encourage productionof electricity from renewable energy sources.

The present legislativerequirement is for new electricity generated from renewable resources toequal 2% of the total national electricity market volume by 2010. Thelegislation is to be in force until 2020. This requirement is in addition to existing renewable energy productionsuch as hydro power, which currently comprises about 10% of Australia’selectricity market.

In order to ensure the targetsare met, the legislation created a market for Renewable Energy Certificates(RECs) which are produced when electricity is generated from renewablefuels. Renewable energy can thereforederive revenue from both the sale of electricity and from the sale of RECs.

The A$100 million investmentincludes a dedicated power plant comprising a new boiler, steam turbinegenerator, cooling towers and improved filtering systems. This investment will improve the overallproduction capacity and efficiency of the Pioneer mill to better serve thelocal sugarcane growers.

CSR is already a significantproducer of renewable electricity with operations at all its seven sugar millswith surplus electricity output sold into the electricity market. CSR’s Invicta mill has produced renewable electricity from surplus sugarcane wastefibre on a commercial basis for supply to the Queensland power grid since 1997.

The proposed project will significantly increase the renewable electricity sold by the company from 150,000 to 350,000 megawatt hours per annum.

By 2005, the total electricityproduction from CSR’s operations will account for 12% of Australia’s target forincreased renewable energy production.

On an annual basis, CSR will beable to produce more Renewable Energy Certificates than have been created todate by any other company.