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If you do what you always did, you will get what you always got! Hon Keith DeLacy AM Chairman Integrated Food and Energy developments Pty Ltd (IFED) AIEA.

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Presentation on theme: "If you do what you always did, you will get what you always got! Hon Keith DeLacy AM Chairman Integrated Food and Energy developments Pty Ltd (IFED) AIEA."— Presentation transcript:

1 If you do what you always did, you will get what you always got! Hon Keith DeLacy AM Chairman Integrated Food and Energy developments Pty Ltd (IFED) AIEA JULY 2014 Page 1

2 THE STUFF OF AGRICULTURE – WATER, SOIL, SUNSHINE, MARKETS THE NORTH HAS IT ALL WATER : Gulf rivers total average run-off is 90 million megalitres (ML) per annum – cf Murray Darling 32 million ML. The Gilbert River system 5.5 million ML - cf the Ord 3.8 million ML. SOIL : “The results of this analysis indicate that very large areas of the Gilbert River catchment (1 to 2 million ha) are moderately suitable (class 3) for a wide range of crops and irrigation methods.” ( CSIRO assessment study FGARA 2014) SUNSHINE : Few agricultural regions in the world have greater solar exposure (sunshine, the essence of plant life) than Cape York Peninsula. 24 JULY 2014 Page 2 AIEA JULY 2014

3 24 JULY 2014 Page 3 AIEA JULY 2014 AND FINALLY MARKETS: More than half the world’s population live in the circle, and 71% of projected growth in global food demand in next 40 years will occur inside circle

4 Lakeland Downs (Cooktown) Territory Rice Ltd (Darwin) Tipperary Land Corporation (Darwin) Northern Agricultural Development Corporation (Katherine) Ord River Project (Kununurra) Page 4 AIEA JULY 2014 Nevertheless NORTHERN DEVELOPMENT - a Litany of Failures!

5 Page 5 AIEA JULY 2014 A NEW MODEL A greenfield development of a privately funded, large-scale, world- class, vertically integrated and sustainable agribusiness. THE IFED PROPOSAL Etheridge Integrated Agriculture Project (EIAP)

6 IFED has secured long-term options over the key properties required for water diversion, water storage, cropping and infrastructure. AIEA JULY 2014 Project area comprises: 5 properties – 326,000 ha Cropping land – 65,000 ha Water storage – 18,000 ha Infrastructure – 2,000 ha Grazing – 241,000 ha Project area comprises: 5 properties – 326,000 ha Cropping land – 65,000 ha Water storage – 18,000 ha Infrastructure – 2,000 ha Grazing – 241,000 ha 5,400,000 (Ord River =3,870,000) PROJECT LOCATION AND SIZE Einasleigh R Gilbert R Page 6 Flow rate in megalitres /year

7 Water is flood harvested into lakes and gravity fed to the co-located farming and processing facilities. 7 AIEA JULY 2014 PROJECT DESIGN

8 Existing cattle operations Existing cattle operations Existing cattle operations Existing cattle operations Off-river Water Storage Off-river Water Storage Cogen – 90MW Bagasse/biogas Cogen – 90MW Bagasse/biogas Gum Plant Sugar Mill 662kt/y of sugar Sugar Mill 662kt/y of sugar Farm Sugar - 40,000 ha Guar – 25,000 ha Farm Sugar - 40,000 ha Guar – 25,000 ha Hull and germ 65 kt/y Sugar cane 4.8 Mt/y Guar bean Raw sugar – 535 kt/y Ethanol – 100 ML/y Steam and Electricity - 43MW Guar gum - 32 kt/y Meat Processing Plant ng cattle operations ng cattle operations Existing cattle operations Existing cattle operations Existing cattle operations Existing cattle operations 200,000 / year Cattle Purchased from local graziers 200,000 / year Cattle Purchased from local graziers Meat products 53 kt/y Hides and offal Pellet Mill Biomass Pellets - 400 kt/y Cane Trash at 8% moisture Cane Tops 120kt/y dry Bagasse 164kt/y dry Aquaculture Redclaw ponds Aquaculture Redclaw ponds Redclaw 7.5 kt/y OVERVIEW: Integration of Water, Farm and Processing Activities. AIEA JULY 2014 page 8 Feed Mill 400 kt/y + purchased molasses Feed Mill 400 kt/y + purchased molasses

9 AIEA JULY 2014 PROJECT COST ESTIMATE: Page 9 ItemCost Estimate - $M Land acquisition plus costs 67 Water Infrastructure & Allocation 497 Farm - Land Preparation 123 Farm - Irrigation Development 367 Sugar mill 371 Ethanol refinery 126 Guar mill 52 Stock feed plant 36 Power station 159 Meat processing 63 Infrastructure & Accommodation 62 Plant & Equipment 54 Capital expenditure$1,977

10 The vertically integrated farming and processing model delivers revenue diversity and high EBITDA. Typical year from 2020: ProductsUnitsQuantity Sell price $/unit Revenue $M Cost $M EBITDA Margin $M Farming sugar caneTonnes 4,800,000 109-109 guar beanTonnes 98,000 25-25 Raw sugarTonnes 535,000487 261 66195 EthanolLitres 100,000,0001.15 115 2590 Guar gumTonnes 32,0004,871 156 33123 Stock feedTonnes 404,000173 70 1753 ElectricityMWH 358,000106 38 1523 Meat & co-productsHead 200,0001,140 228 20820 Indirect Overheads 22 -22 Total 868 520348 Page 10 AIEA JULY 2014 PROJECT FORECAST FINANCIALS

11 Unlike extractive industries which are finite, EIAP will deliver truly sustainable environmental, social and economic outcomes. Carbon sustainability – Operates completely on renewable electricity (Cogen); – Exports renewable electricity into the grid; and – 400,000 tonnes biomas pellets – stored carbon – Ethanol produced equals 9 times volume of liquid fuel consumed in the business. Ecological sustainability – Propose to harvest just 10% of Gilbert River system average annual discharge (0.55% of Gulf Rivers discharge) – Off-river water storage – much more ecologically sustainable than on-river dams; – Reduced sediment loss due to better farm design and management; – Negligible nutrient run-off due to state-of-the-art trickle tape irrigation; and – Improved pest management (weeds and destructive feral animals). Page 11 AIEA JULY 2014 SUSTAINABILITY

12 The Etheridge shire is classified as ‘very remote and disadvantaged’ – unemployment rate 16.2% (March 2012); EIAP will create 1,200 direct jobs; EIAP will underwrite local business and create new business opportunities; Investment in housing and services will multiply benefits; and An indigenous employment program will provide a pathway to economic independence for the local indigenous population. Positive animal welfare outcomes Reduction of stock losses in dry season (water and feed availability); and Local processing eliminates long distance transport of cattle. Page 12 AIEA JULY 2014 Social Sustainability

13 Bringing Government policy to life (State and Federal); Federal Government revenue – company and income taxes; State Government revenues – payroll tax, port usage fees, vehicle registrations, fees and charges; Reduces social outlays – unemployment benefits, subsidies, disaster relief, etc; Electricity grid enhancement with renewable electricity, RET contribution; Larger rate base for local council; Improved community facilities; and Jobs, jobs, jobs… Page 13 AIEA JULY 2014 Government & Community Benefits

14 Reaching negotiated agreements with five land owners that secures 326,000 hectares under long term options; Completion of detailed technical and commercial feasibility analysis; “Development Protocol” for a water allocation agreed with the Queensland Government; Declaration of a “Co-ordinated Project” by the Queensland government; and Well progressed with Pre-Construction Phase capital raising. Page 14 AIEA JULY 2014 PROJECT MILESTONES

15 A LITANY OF FAILURES? What’s changed this time? A NEW MODEL - WHERE EIAP IS DIFFERENT SCALE BIO-MASS = ENERGY INTEGRATION DE-RISKED CLIMATE INNOVATIVE WATER STORAGE OFF-THE SHELF AGRICULTURE AND PROCESSING Page 15 AIEA JULY 2014

16 WHAT’S CHANGED THIS TIME? SCALE Scale delivers local processing infrastructure – vital in isolated regions Economies of scale in production Market power – both selling and purchasing In-house research and development Strong capital base In isolated areas small or fragmented water allocations do not bring about real economic development. Water must be allocated on the basis of jobs/economic benefit per litre – not on the basis of political expediency. Page 16 AIEA JULY 2014

17 WHAT’S CHANGED THIS TIME? ENERGY The tropics have an extraordinary capacity to produce bio-mass – and hence electricity and steam via co-generation. EIAP will produce 90 mw of electricity – 43 mw will be exported into the grid for net $23 million, the rest powering the project - free renewable energy, underwriting the economics of all processes. INTEGRATION (i) EIAP is a single entity, privately funded, Water storage, farming and processing are fully integrated and aligned Page 17 AIEA JULY 2014

18 Existing cattle operations Existing cattle operations Existing cattle operations Existing cattle operations Off-river Water Storage Off-river Water Storage Cogen – 90MW Bagasse/biogas Cogen – 90MW Bagasse/biogas Gum Plant Sugar Mill 662kt/y of sugar Sugar Mill 662kt/y of sugar Farm Sugar - 40,000 ha Guar – 25,000 ha Farm Sugar - 40,000 ha Guar – 25,000 ha Hull and germ 65 kt/y Sugar cane 4.8 Mt/y Guar bean Raw sugar – 535 kt/y Ethanol – 100 ML/y Steam and Electricity - 43MW Guar gum - 32 kt/y Meat Processing Plant ng cattle operations ng cattle operations Existing cattle operations Existing cattle operations Existing cattle operations Existing cattle operations 200,000 / year Cattle Purchased from local graziers 200,000 / year Cattle Purchased from local graziers Meat products 53 kt/y Hides and offal Pellet Mill Biomass Pellets - 400 kt/y Cane Trash at 8% moisture Cane Tops 120kt/y dry Bagasse 164kt/y dry Aquaculture Redclaw ponds Aquaculture Redclaw ponds Redclaw 7.5 kt/y INTEGRATION (ii) The waste from one process becomes the feedstock for the next process. page 18 Feed Mill 400 kt/y + purchased molasses Feed Mill 400 kt/y + purchased molasses

19 WHAT’S CHANGED THIS TIME? DE-RISKED CLIMATE DROUGHT PROOF – based on the project’s water storage and consumption metrics, 100 years of river flow data demonstrates that EIAP would have harvested a full crop each year. CYCLONE PROOF – THE PROJECT IS 330 KM INLAND FROM THE TROPICAL COAST INNOVATIVE WATER STORAGE Off-river water storage is more efficient and more sustainable than in-river dams. Compared to the CSIRO FGARA proposal EIAP can store three times the volume of water at half the cost – utilising the special local terrain In-river dams harvest all the small flows, off-river storage tends to harvest the big flows, greatly enhancing ecological sustainability. Average depth much greater minimising evaporation. Page 19 AIEA JULY 2014

20 WHAT’S CHANGED THIS TIME? OFF-THE-SHELF FARMING AND PROCESSING, AND TROPICAL CROPS IN A TROPICAL ENVIRONMENT All of the processing technology is off-the-shelf – sugar mill, co-gen, ethanol, meat processing etc Queensland can grow sugar cane (the Mareeba district has a similar climate, is 150 km away on a similar latitude and grows quality sugar) But the opportunity is there to deploy all of the accumulated wisdom of the last century Page 20 AIEA JULY 2014

21 THE WAY FORWARD AUSTRALIA NEEDS A CHANGE IN: Mind set – particularly in relation to scale and water allocation Policy – water, tenure, land clearing… Regulations – still a nightmare out there! Incentives – particularly tax incentives, for patient, start-up, venture capital in the agri sector. IF WE DO WHAT WE ALWAYS DID WE WILL GET WHAT WE ALWAYS GOT! Page 21 AIEA JULY 2014


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