CEFC finance accelerates coal exit for manufacturing giant Manildra Group

5 May 2022

Australia’s largest wheat processor and ethanol manufacturer will take a significant step toward reducing its greenhouse gas emissions, drawing on an $85 million CEFC investment to exit coal at its primary manufacturing plant in regional NSW.

The CEFC investment, on behalf of the Australian Government, will transform how the Manildra Group facility in Nowra generates steam and electricity by eliminating coal from its energy mix and replacing it with a gas fired cogeneration plant.

In an important development for Australia’s ambitions to reach net zero by 2050, the project will help kickstart the transition of the domestic industrial sector to a low carbon future, decarbonising operations while maintaining global competitiveness.

The installation of cogeneration technology will reduce emissions at the energy intensive Nowra plant by about 40 per cent, abating an estimated 332,000 tonnes of CO2-e annually. Manildra will no longer use coal to generate steam at the plant.

The CEFC finance has helped accelerate Manildra Group’s exit from coal, with the successful financing of the new combined heat and power plant, enabling the company to divest a dormant Lithgow coal mine.

CEFC CEO Ian Learmonth said: “In our efforts to reduce greenhouse gas emissions and reach net zero, Australia must put increasing focus on those harder to abate sectors of the economy such as industry and manufacturing.

“Domestic manufacturing poses a significant decarbonisation challenge. As the world steps up its focus on emissions reduction, carbon intensive fuel sources are becoming less economic. Manildra Group is a globally competitive, family business that recognizes the financial prudence of long-term investment in lower carbon fuel to power production.

“With this investment the CEFC is helping finance the decarbonisation of the largest integrated wheat gluten, wheat starch, glucose and ethanol facility of its kind in the world - a major step forward for emissions reduction in Australian manufacturing.”

Mr Learmonth added: “Installation of the combined heat and power plant is the first stage in Manildra Group’s transition to low carbon manufacturing. The company will actively investigate green hydrogen to power the plant in the future, as well as more conventional renewable energy sources as electrification of industrial steam becomes more economic.”

At its Nowra site, Manildra Group produces Australian-grown and made premium food and industrial products from vital wheat glutens, wheat starches, and syrups to ethanol and animal stockfeed.

Manildra Group Managing Director John Honan said that the family-owned Australian company recognised that this project would establish a stable, reliable, and cleaner energy source, critical to local jobs, industries and the growth, success and future of their manufacturing operations.

Mr Honan said: “Employing more than 350 people on site, our integrated manufacturing process relies on heat (from steam) production to power our operations, day-in, day-out, 365 days a year.

“We’re very proud to work with the CEFC, their support has enabled Manildra Group to increase cleaner energy sources, substantially reduce our greenhouse gases and reduce coal usage entirely.”

The CEFC investment will finance two behind-the-meter high efficiency gas fired combined heat and power plants. The new infrastructure will replace the coal fired boilers and the existing gas boilers used to generate steam.

The cogeneration technology will produce up to 100 per cent of the electricity required at the Nowra plant. Independent analysis in support of the development approval by engineering consultant GHD estimates that it will reduce the emissions intensity per tonne of flour throughput from 0.62 to 0.36t CO₂.¹

The $190 million project is also financed by a $95 million commercial debt package which is supported by a $50 million guarantee from Export Finance Australia. In addition, Manildra Group has successfully registered the project with the Clean Energy Regulator to generate Australian Carbon Credit Units.

Executive Director Wind Energy and Manufacturing Andrew Gardner said: “Our work with the manufacturing sector recognizes that it is not yet economic to use renewable energy to produce the enormous amount of steam required in industrial processes.

“This investment in fuel switching enables a large Australian manufacturer to reduce its dependence on coal and lower its emissions as a transitional step towards a longer-term renewable energy solution.”

About Manildra Group

In 1952, Manildra Group began with the Honan family’s purchase of a flour mill in Manildra, central west New South Wales. Today employing more than 1,000 people, the company is a diverse agribusiness, partnering with Australian farming families to produce food and industrial products at their world-class manufacturing sites. Their Shoalhaven Starches site, in Nowra, New South Wales is the global leader in the production of vital wheat glutens, modified proteins, wheat starches, syrups to ethanol and animal stockfeed. Today it is the largest wheat gluten and starch manufacturing site of its kind in the world, employing 350 people, operating day-in, day-out, 365 today a year. Manildra Group has become one of the largest exporters of products in containers through Australia’s largest port, Port Botany.

1 Greenhouse Gas Assessment Technical Report Shoalhaven Starches Modification 23 by GHD 24 May 2021