AA Co AGM questions: Failed Livingstone beef plant continues to arouse investor curiosity    

Jon Condon, 28/07/2023

THE ghosts of the Australian Agricultural Co’s failed attempt at beef processing near Darwin continue to float through investors’ minds, with a large chunk of questiontime at yesterday’s AA Co annual general meeting taken up by the topic.

There was only a handful of questions from shareholders fielded by the board during the gathering.

One shareholder asked about the large gap between AA Co’s net tangible assets worth ($2.59 in May), and the share price (yesterday: $1.48).

Chairman Don McGauchie said the current NTA figure included $550 million of increases in pastoral property improvements over the past two years, extending the NTA/share price gap.

“The board and the executive team are focussed on the areas within our control,” he said, “including generating value for shareholders in delivering the best operating profit and executing on the strategy.”

“Continuing to pursue opportunities under our strategic pillars is the best way to ensure we unlock value for all shareholders,” he said.

Livingstone Beef prospects

Another shareholder asked what the real reasons were behind the Livingstone Beef plant not being utilised in some way, and whether the board could foresee a time when it might re-open.

“I won’t talk about the (non-existent) dividend, but I can live without it,” he added, somewhat wryly.

Livingstone, which cost more than $100 million to build, was shut within 12 months of its launch back in 2018, and has been mothballed ever since.

Mr McGauchie said Livingstone was in an ‘advanced form’ of mothballing, which meant it could be re-activated quite quickly, if necessary.

“We are certainly conscious of keeping the facility in good condition, because infrastructure like that can deteriorate – particularly in the tropics,” he said.

AA Co chairman Don McGauchie addresses yesterday’s AGM

When asked by Beef Central, AA Co was unable to provide a separate line-item figure on the annual site maintenance costs, but industry chatter suggests it may be as much as $1 million each year to keep it in a state of ‘readiness.’

“We have spent money doing that, and also on some upgrades that we see as being of benefit, so we really do still hold Livingstone as an important facility,” Mr McGauchie said.

He said the big challenges for Livingstone were a combination of two issues: supply of cattle, and the (high) cost of freight in any beef export out of Darwin.

“Freight out of Darwin is quite high, compared with other ports,” Mr McGauchie said.

“The people (other beef processors) in the east and south can come into our cattle catchment area and draw cattle away. And on top of that we’ve had some pretty tough seasons in the territory as well.”

“We just don’t have the numbers up there to make Livingstone work. That could change, but the biggest issue, I think, will be the freight cost issue.”

Government role?

“Really, I think there is an opportunity here for us to be talking with the Federal Government about development in the north. There are other industries up there, but we just don’t want the Northern Territory to be a government operation – it needs to have a private sector, and freight cost is a real issue.”

Mr McGauchie said most people understood the reasons for high freight costs in the region, the way container traffic was hubbed out of major collection points like Brisbane and Sydney.

Freight cost had nothing to do with the (Chinese) ownership of the Port of Darwin, he said.

“Freight is a much bigger issue than we realised when we built Livingstone, but we are certainly looking at all opportunities to have the plant open again. I am confident that one day, the circumstances will be there – but northern Australia can be a difficult place to operate.”

“A lot of very good ideas and great visions don’t get to where we’d like them to because of timing – and timing was the great question here.”

“But we will remain ready, and look at every opportunity to get the plant back into action, if we can, because it’s a great asset.”

Robotics answer?

Asked whether robotics and automation, like that seen as Northern Cooperative Meat Co at Casino, might be incorporated at Livingstone to improve the plant’s prospects for re-opening, Mr McGauchie said it would not, at the moment.

“Part of the reason for that is because automation and robotics works best in lambs, where carcases are like peas in a pod, or higher quality cattle of a particular type.

“Part of our problem in the north was that we were using the cattle than nobody else really wanted – old cows and bulls – because all the good young cattle were going out on live export.”

“So introducing automation and artificial intelligence into Livingstone would not achieve very much, because the cattle vary so much. But again, we are all seeing remarkable achievements in these technologies. In one of my other businesses, wool testing, we are moving more and more towards being able to put robotics into production chains,” Mr McGauchie said.

“The modern robots that are now available don’t have to be set in a great cage and kept away from people. They can be put into production chains, with people working beside them. There are ways of introducing these technologies into systems more slowly, without having to make a very big investment off the bat.”

Long-gone are the large attendances at AA Co annual general meetings seen in the past.

Yesterday’s gathering in Brisbane, live-streamed for the convenience of those shareholders who chose not at attend, attracted an audience of only about 40 people. About a dozen of those were AA Co staff, with the balance being a handful of ‘suits’ (institutional investors) plus a few loyal ‘ma and pa’ investors.




Your email address will not be published. Required fields are marked *

Your comment will not appear until it has been moderated.
Contributions that contravene our Comments Policy will not be published.


  1. Bruce Young, 31/07/2023

    It’s blindingly obvious that Governments don’t care and aren’t focusing on the north of Australia, yet whether it be agriculture or mining, the north of the tropic of Capricorn provides most of the government’s wealth through exports

  2. Jane grundy, 29/07/2023

    I have stayed with these shares for many years in the vain hope that one day before i die they might come good. Im only a small investor but this is part of my retirement fund.

  3. Peter Hamilton, 28/07/2023

    Quite amazing to read the issues that prevent profitability of Livingstone abattoir.

    All of the reasons identified were raised in the Feasibility Study.
    Seems a heap of them were ignored.

    Who is accountable for that?

    • Peter Vincent, 01/08/2023

      McGauchie continues the long held tradition of AACO chairs avoiding the “nasties” with answers that have no relevance to the questions. The primary factors in profitability of any NT abattoir are supply of stock, cost of freight, supply of labour and FOB value. Apparently the first two have blown the nonsensical investment sky-high…… surprise, surprise. Furthermore, the Chair “doesn’t want the NT to be just a government operation”, but was happy to include government funding of $12.5m in the initial investment costs. McGauchie’s laughable statement “the board and the executive team are focused on the areas within our control, including generating value for shareholders in delivering the best operating profit and executing on the strategy,” is best buried with the famous quote from former coach John Kennedy… “don’t think….just do something”!

    • Simon Jenkins, 30/07/2023

      Excellent point, Peter.

      Don McGauchie, the Chairman of AACo was encouraged to ‘think bigger’ that the ‘limitations’ in the business case by Tavistock director Shehan Dissanayke – with Tavistock ‘lending’ AACo the cash via Convertible Notes that have allowed it to buy 51% control on the cheap.

      Only Don could answer how shareholder interests were served by his decision (as there are no other independent directors still around from that era when the decision was made – happy to be corrected).

Get Beef Central's news headlines emailed to you -