SUNBIZ

Penang Mill Will Be Closed For Good

  The Penang Mill will be closed for good. That was the word from the Fiji Sugar Corporation following a Board meeting in Lautoka yesterday where the decision was made.
28 Mar 2017 15:53
Penang Mill Will Be Closed For Good
FSC Chairman Vishnu Mohan and CEO Graham Clark . Photo: Charles Chambers

 

The Penang Mill will be closed for good.

That was the word from the Fiji Sugar Corporation following a Board meeting in Lautoka yesterday where the decision was made.

FSC Chairman Vishnu Mohan, while making the announcement, said to repair and refurbish the mill, it would cost the Corporation between $40-$50 million to make it viable.

“If FSC had $50 million today, we would rather re-do the rail system instead to transport cane to the mill.”

Mr Mohan said the company could not afford the repair costs.

He likened the re-building of Penang Mill as like “beginning from Ground Zero.”

He said regardless of which business was involved, whether it be sugar or anything else, it was important on how money was spent and one could not afford to “throw good money after bad.”

“If there was a potential to do it (repair the mill) we would have done it.”

“It is a 136 year old mill and no money was spent on its upkeep in the past 20 years.”

“If we are to restart the mill it would cost us a lot of money.”

Mr Mohan said the main focus and priority of FSC would have to be on cane production and getting all three other mills to work to capacity and efficiently.

He said FSC’s finances needed to be spent wisely for the viability of the sugar industry in the future.

Mr Mohan added that the future strategies for FSC would be worked out and gets the Board’s approval and then for the final approval from the Prime Minister Voreqe Bainimarama who is also Minister for Sugar.

“It is very important that we are transparent and explain to the community why we are doing this.”

FSC CEO Graham Clark said part of last week was spent at Rakiraki talking to cane growers, lorry operators and other stakeholders.

“We discussed issues that were affecting them as a community.”

“It’s more than about the Penang Mill – it’s more about the growers’ viability and making it more profitable for them.”

“We made a lot of headway in explaining to them the sort of things we would like to do.”

Mr Clark said the meeting displayed the start of a much closer relationship between FSC and the cane farming community in Rakiraki.

“We came out of it with a more positive feeling of how we could move on.”

“More than ever before, the community understands what we are trying to achieve and agree that we will put forward a more rosy and viable future for the industry.”

 All 110 employees at Penang Mill would not be prejudiced by this decision as discussed in the Board meeting. A lot of employees have been re-deployed to other mills. Mr Clarke said they would find positions for those they could help and “we will take care of the rest.”

  Mr Mohan reiterated the need for the industry to be viable as sugar was important to the economy as like tourism.

 FSC needs 2.5 million tonnes of sugar cane this year to balance their books.

 Mr Clarke clarified that the 35 percent loss at Penang Mill was solely FSC’s loss and nothing was lost by the growers as they were paid for all the cane they supplied. Most of the loss came from transportation of sugar cane to the Rarawai and Lautoka Mills.

 The need to use 10-wheeler vehicles to transport cane to Rarawai from Rakiraki would be more profitable.

 Transportation costs would be known once meetings were done with cartage companies but the final price would be reached by keeping it commercially viable. The price for cartage from last year will not be used again.

 Penang Mill is unsafe at present because of damage from Cyclone Winston and it would be dismantled once the place was safe to work in.

 Mr Mohan said FSC would do whatever it took to improve its financial position. The Company’s financial position was described as “very tight.”

 FSC agreed this year’s crop would be much larger and they would look at crushing seven days

Feedback:  charles.chambers@fijisun.com.fj

 

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