Plans to invest more than $24 million in the Deniliquin Rice Mill have secured an export deal of Riverina rice into Japan.
SunRice chair Laurie Arthur said the capital investment at Deniliquin had already begun and was being guided by Japanese corporations.
He said SunRice’s commitment to the mill improvements had led it to sign a contract with Sumitomo — a leading global trading and investment business — in November.
‘‘We’ve had different delegations of Japanese millers and buyers come and have a look at the mills, and from that we knew they had to be upgraded,’’ Mr Arthur said.
‘‘One part is new laboratory equipment that will allow us to set up a special analytical laboratory, and that equipment has already arrived.
‘‘We’ll also upgrade the mill to suit the new requirements, because we found the mill configuration was not enough to meet Japanese rice standards.
‘‘We used to mill a lot for Papua New Guinea (at Deniliquin) and the rice would go in bulk rail cars and then usually be packed at Lae (in PNG).
‘‘The upgrades will allow us to do the finished product for Japan and packing at Deniliquin.
‘‘We’ve recently installed vertical white mills — we had horizontal mills which were older — which are more efficient and don’t crack the grain as much. It means we’re left with more of a whole grain.’’
Mr Arthur said the remaining upgrades would continue to be rolled out as approved, saying the board had already signed off on some capital expenditure requests for Deniliquin.
He said while there was a draft schedule of works, more finite timetables are not yet confirmed.
‘‘The work will occur as the cap-ex rolls out, and that should be over the next 24 months,’’ Mr Arthur said.
The deal with Japan is part of SunRice’s plans to expand niche rice markets, and is based on the provision of sushi rice — using varieties including Koshihikari, Opus and YRK5.
As well as addressing a forecast shortfall in Japanese grown rice, Mr Arthur said the deal would see Riverina rice used in a wider range of Asian markets.
‘‘We see a lot of sushi chains in Japan operating in other Asian countries,’’ Mr Arthur said.
‘‘With the high cost of rice in Japan at the moment, these companies are finding the costs don’t fit in with their sushi chains, for example in Singapore.
‘‘The demographics in Japan are changing. They have 1.7 million rice farmers and their average age is 70. A lot of young people in Japan don’t want to be rice farmers — but that’s handy for us.’’
SunRice revealed a significant upgrades program across the company’s entire footprint, which is estimated at between $200 million and $300 million.
One of the ways SunRice intends to raise the necessary capital for the work is to move its B Class shares from the National Stock Exchange to the Australian Securities Exchange, allowing outside investors to buy shares.
The ASX listing proposal, which the company says will maintain A Class share (grower) control, was outlined at a series of public information sessions this week, including in Deniliquin on Monday night.
More meetings and detailed proposal booklets for shareholders will be organised in coming months, before a vote on the proposal at SunRice’s September 20 annual general meeting.
A 75 per cent majority from both share classes must be obtained for the proposal to pass.