Murray Goulburn has revealed it will decide on a location for its new dryer plant by the year’s end.
In an interview with The Standard, interim chief executive David Mallinson said MG was committed to the expansion of its nutritional powders production but ultimately had to “look at capital cost” before going ahead.
“We don’t have a hard timeline but we hope to go to the board by the end of the calendar year,” he said.
It emerged this week a planned $300 million factory at Koroit was in doubt because MG was looking at other sites that could cut $50 million off the cost.
Mr Mallinson said it had to consider “the total cost of putting up a factory” including power, gas and effluent infrastructure.
“We have to spend shareholders’ money wisely,” he said.
“The costs were estimated (for Koroit) but other opportunities have come up that provide a lower cost base for us, which we’re evaluating.”
Mr Mallinson said land already purchased ahead of the Koroit development was intended to “put a buffer zone around the total operational footprint”.
“To us, that money isn’t lost,” he said. “That land gives us a clear buffer between our factory and the rest of the town that allows us to operate our factory.”
His comments followed MG forecasting a lower farmgate milk price and the suspension of its Milk Supply Support Package (MSSP).
Mr Mallinson said it “didn’t say (the lower forecast) was a good thing” but it was responding to a “crisis” that had “come up in the last four weeks”.
He said excessive rain had “caused pasture and crop damage that was reflecting the milk intake”.
Mr Mallinson said MG was acutely aware suppliers were doing it hard but stood by the decision to retrospectively take back money from suppliers through the MSSP.
“The decision was made with the right intentions,” he said. “The point I want to keep driving home is that the cost we can control, we are addressing. What we can’t control is market conditions.
“It’s about us being totally transparent.”
