The Australian government has approved a $32 million loan for construction of a cotton gin at Kununurra though the project’s full potential hinges on approvals for land development.
The Australian government has approved a $32 million loan for construction of a cotton gin at Kununurra though the project’s full potential hinges on approvals for land development.
The loan approval is the single biggest step in a years-long effort to revive cotton growing in the Ord River irrigation area.
The total cost of building the ‘stage 1’ gin is believed to be about $50 million, with the balance coming from private investors.
The project proponent is Kimberley Cotton Company, which is chaired by Kununurra farmer Gabrielle Blocker.
It is supported by the Ord River District Co-operative, private company Kimberley Agricultural Investment and local Aboriginal group MG Corporation.
The project will create 30 full time jobs during construction and 21 new jobs during operations.
More significantly, it will provide a new crop for farmers in the region, with the government estimating annual production worth an estimated $925 million.
The gin is likely to commence with throughout of about 70,000 bales, which requires about 10,000 hectares of irrigated cotton plantings.
For the industry to become efficient and generate commercial returns, the capacity of the gin will need to expand, and that needs extra land.
Extra plantings are likely to come from land being switched away from other crops, such as sandalwood and corn.
Farmers are also likely to rotate crops.
However, the industry is also awaiting state government approvals to develop more farmland.
Regional development minister Alannah MacTiernan said today the government was continuing to work with growers to secure the necessary approvals for farmland development.
The largest grower is likely to be KAI, which has been conducting trials of cotton over the past five years, with more than a dozen other farmers also participating.
This cotton has to be trucked to existing gins in Queensland for processing.
The construction of a gin is a ‘back to the future’ moment for the Ord River irrigation area, with cotton chosen as the principal crop when it was opened in the 1960s.
Early crops were destroyed by pests, prompting a shift to alternatives, with sandalwood and corn currently the biggest industries in the area.
The development of a genetically modified cotton variety known as Bollgard 3, along with improved agronomic practices, has overcome the early problems with pests.
The McGowan government has supported the Ord cotton project, previously providing land for the gin and $4 million towards power supply and to assist the development of a business model, preliminary design work and approvals.
“The NAIF loan will build on the sound foundations laid by the Kimberley Cotton Company and the McGowan government, spurring growers on to increase production so the gin can achieve the scale required for viability,” Ms MacTiernan said.
MG Corporation executive chair Lawford Benning praised the funding news.
“MG Corporation is excited that significant progress is being made toward establishing a cotton gin, which we believe would ensure Kununurra plays an important role in the cotton industry," he said.
“As a partner in the Kimberley Cotton Company, we would be very proud if cotton grown on MG country could be processed on MG country.
“We believe this cotton gin would create a significant opportunity for training and employment for MG people, and the wider Kununurra community.”
Australia’s minister for agriculture and Northern Australia David Littleproud said the investment by NAIF showed what economic development can look like in Northern Australia.
“The cotton gin has been talked about for a long time, and the construction of local cotton processing facilities will be the trigger for much broader investment in the region,” he said.
The loan will be provided by the Northern Australia Infrastructure Facility, subject to final environmental approvals.
Chief executive Chris Wade said the investment took the total amount committed by NAIF to date to more than $3.1 billion.
“Supporting the establishment of a new $925m cotton growing industry in northern Australia is an example of NAIF helping generate transformational growth in northern Australia,” Mr Wade said.
The funding for Kununurra comes after growers in the Northern Territory had lobbied for a gin to be built near Katherine.
A NAIF spokesperson said it has engaged with other cotton projects in northern Australia including projects in the Northern Territory.
“We understand that these projects can coexist with the Kimberly Cotton Gin project,” the spokesperson said.
“If other projects were to make application to NAIF we would welcome their interest.”
