A new $400 million multi-purpose sugar mill planned for Western Australia supports North Queensland Bio-Energy Corporation Limited's (NQBE) push for diversification of the Australian Sugar Industry.

NQBE Chairman, Robert Carey, said a report published in The Australian newspaper recently had revealed plans by Chinese conglomerate Zhongfu to grow sugar cane on 30,000 hectares of land in the Ord irrigation area near Kununarra.

"According to the report, Zhongfu will process the sugar cane grown in a new $400 million bio plant, producing sugar and ethanol," Mr Carey said.

"The report also quotes leading biofuels crop researcher Ian O'hara, from the Centre for Tropical Crops and Bio-commodities at Queensland University of Technology , who stated that the lack of ethanol production in Australia is 'a reflection of ageing agricultural processing plants, especially in the sugar industry, and a lack of strong government policy supporting bioethanol production'."

Mr O'Hara told The Australian it was a "paradox" that while countries such as Brazil have been progressing quickly towards switching from away petrol to a higher reliance on ethanol, interest in Australia had been low.

He said new industry players such as Zhongfu "will do what makes business sense, and there are now more than 10 countries worldwide using bioethanol as fuel in their cars.

"In the absence of strong government policy supporting ethanol production, it will be difficult for the existing sugar industry to move strongly in that direction given most of our assets are old; but a new co-production mill, in WA or northern Queensland, would be a real opportunity.

"We should be making this switch as quickly as we can; it's good for the environment, adds value to our agricultural production, provides regional employment and reduces our reliance on $20 billion of oil imports," Mr O'Hara said.

"How many more good reasons do you need."

Mr Carey said there was also a strong international demand for ethanol for purposes other than fuel.

"NQBE has received approaches from several overseas companies seeking long-term contracts to buy all the ethanol that NQBE can produce, so there is already a market out there and no necessity to rely on governments introducing biofuel mandates. The Australian sugar Industry really doesn’t understand the ethanol market and its potential to value add to the industry participants and that’s a shame."

“Zhongfu’s desire to establish a new sugar and ethanol facility in WA supports and provides confidence for NQBE’s $450m sugar, ethanol and co-generation facility planned for the Herbert River district.”

Mr Carey said the fact that a major international company like Zhongfu was prepared to invest $400 million in a bio-plant in Australia challenges industry statements on ethanol. The Australian sugar cane industry has also ignored or failed to recognise the potential to produce large volumes of ethanol from biomass (a waste product) using second generation cellulosic technology. 

"The Chinese do not easily rush into major projects. They do their homework, explore all aspects and do not move forward unless the figures stack up," he said.

Read more from 'The Australian' article published on 19th July 2012