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The Australian Sugar Industry. Sucrogen – more than sugar. We think so!. CSR Sugar “Sucrogen” participates across the value chain. Growing. Harvesting. Milling. Logistics. Marketing. Refining. Molasses. Cogen. Ethanol. Fertiliser. 3.

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csr sugar sucrogen participates across the value chain
CSR Sugar “Sucrogen” participates across the value chain

Growing

Harvesting

Milling

Logistics

Marketing

Refining

Molasses

Cogen

Ethanol

Fertiliser

3

sucrogen is australia s leading sugar producer and 7 th largest in world
Sucrogen is Australia’s leading sugar producer and 7th largest in world
  • Sucrogen is a world scale raw sugar producer, and the second largest exporter of raw sugar in the world
  • In Australia, Sucrogen is the largest raw sugar producer
  • Sucrogen exports of ~2Mt are greater than 50% of Australia’s sugar exports

Major Global Producers (Raw Sugar Equivalent, M tonnes)

Raw Sugar Production by Miller, M tonne, 2008 Season

7

# of Mills

3

5

1

1

2

3

1

1

1

Source: Company filings

Source: ASMC, CSR Analysis

large even vs brazil
… large even Vs Brazil

Sucrogen is a large-scale miller, even when compared to the Brazilian sugarcane industry

Despite higher in-field cane costs, Sucrogen is competitive with Brazil due to lower cane and sugar logistics costs and comparable milling costs

Sucrogen’s milling business is as large as the 5th largest Brazilian Miller

Relative Cost of Sucrogen is Competitive With Brazil (Centre South)

Sucrogen

Source: CSR Analysis

5

sucrogen is a significant producer of renewable energy ethanol
The largest Australian producer of sugar-based ethanol

A significant and growing fertiliser market share in major Queensland farming areas with innovative “Liquid One Shot” products

Significant potential for growth—potential to make up to 100 ML of ethanol using molasses

Sucrogen is a significant producer of renewable energy—ethanol
sucrogen is australia and new zealand s leading refiner
Sucrogen is Australia and New Zealand’s leading Refiner

Refining

Food & Beverage

Retail

Foodservice

ContainerisedExports

Bulk ExportsBiBo

#1

#1

#1

#1

#1

  • Three refineries, 70% of Australia and New Zealand’s refining capacity
  • The #1 supplier across all channels
the australian sugar industry needed to adapt
The Australian Sugar Industry needed to adapt

Traded Sugar Supply by Country

  • Australia still important in world trade but Brazil displaced Australia in 1996 as key exporter
  • Australian production has dropped but mainly from smaller producers due to:
    • Sugar price
    • Urban encroachment
    • Alternative crops

Source: USDA

Australian Cane Crushed by Company

Source: BSES, CSR Analysis

how we adapted
How we adapted

Cane Crushed by Region

  • Milling consolidation has occurred in recent years as cane supply reduced
  • Australia’s best regions are low cost by world standard, and
    • Gap to Brazil has narrowed in recent years (due to exchange rate)
    • Although still higher than Brazil

Source: BSES, CSR Analysis

Cost of Production – Full Economic, FOB basis, 07/08

Source: LMC

industry restructuring
Industry Restructuring
  • Industry restructuring has allowed the industry to respond dynamically to a changing environment
    • Deregulation
    • Farm consolidation
    • Mill consolidation
    • Grower pricing
    • QSL privatisation & commercialisation
    • STL industry ownership

10

cogen investments aid capital returns
Cogen investments aid capital returns

Sugar Industry Renewable Electricity Capacity

  • Cogen capacity has increased in response to government policy settings (MRET)
  • Sucrogen has added 100MW over last 15 years. Has potential to add a further 300MW bagasse-based capacity

Source: ORER, CSR Analysis

Potential of Sucrogen cogen supply

australian ethanol market is developing
Australian Ethanol Market is developing

Australian Ethanol Supply Growth

  • Ethanol supply has doubled over the last decade as the fuel ethanol market has developed
  • Sugar industry has potential to supply large amounts of ethanol.Requires:
    • Further market development
    • Supportive government policy
    • Attractive price relativities

Source: Biofuels Association of Australia, CSR Analysis

Potential of Sugar Industry Supply

Source: CSR Analysis

ethanol excise
Ethanol Excise
  • Sugar-derived ethanol offers significant CO2 abatement opportunity
  • Current government policy does not differentiate between carbon intensity of fuels (even under CPRS)
  • Maintain existing policy of energy neutrality of excise, and then adjust excise based on carbon intensity of fuel
  • Sugar-derived ethanol would attract excise of 6cpl*, compared to 38cpl for petrol.

*Unadjusted ethanol excise would be 25cpl based only on energy neutrality

Sources: Energetics 2007 (Peer reviewed by CSIRO)

13

positive market dynamics for sugar and renewable energy
Positive market dynamics for sugar and renewable energy

World ICE#11 Raw Sugar Price

  • Fundamentals are supportive for global raw sugar price
  • Longer term global sugar demand remains strong
  • Carbon constrained economy expected to drive increased demand for renewable fuel and energy

Expanded Renewable Energy Target

(Source: Department of Climate Change)

sugar yields are significantly less variable than grain yields
Sugar yields are significantly less variable than grain yields

Yield Index (1978-79 = 100)

Year on Year % Change in Yield

Orange rust disease in 2000 season

Severe drought in 1990 and 1991 seasons

Source: ABARE Australian Commodities Dec’09, CSR Analysis. Sugar yield is tonnes of sugar per hectare harvested

*Coarse grains are barley, oats, sorghum and maize

15

sugar yields are significantly less variable than grain yields16
Sugar yields are significantly less variable than grain yields

Yield Index (1978-79 = 100)

Year on Year % Change in Yield

Orange rust disease in 2000 season

Severe drought in 1990 and 1991 seasons

Source: ABARE Australian Commodities Dec’09, CSR Analysis. Sugar yield is tonnes of sugar per hectare harvested

*Coarse grains are barley, oats, sorghum and maize

conclusion a profitable industry with growth options
Conclusion – A profitable industry with growth options
  • Attractive industry outlook
    • Positive trend for long term sugar price based on increasing world sugar and ethanol demand
    • Industry has reshaped itself to be responsive to market drivers
    • Opportunities for growth in renewable energy – ethanol and electricity
  • Sucrogen, as the leading Australian player, is well positioned to further capitalise on these opportunities

Increased earnings base from refining and renewables

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