The Australian Agricultural Co has decided to press-on with the acquisition of land in anticipation of the construction of its abattoir project near Darwin – just as it appeared that the project might be discarded because of lack of State and Federal Government financial support.

In an advice to the Australian Stock Exchange this afternoon, AA Co surprised many onlookers by announcing that it intends to proceed with the purchase land at Livingstone Farm, south of Darwin, for $13.3 million. Settlement is expected to occur by late June.

In May, AA Co announced that it had received an Exceptional Development Permit approving the development of an abattoir on the site. The company has satisfied itself that these EDP conditions have either been met or are capable of being met as part of the final development and approval processes.

The Livingstone site is about 600ha in size, of which 14ha will be occupied by the abattoir, yards and associated infrastructure. The balance will comprise irrigation zones, natural wetlands, ponds and other areas providing facility and amenity to the site. The additional land purchased will ensure a sufficient buffer zone between the abattoir and adjoining areas.

In stark contrast with the overwhelming view of the broader beef processing industry, AA Co chief executive, David Farley, said in this afternoon’s ASX statement that the project fundamentals around a processing plant in the NT were ‘compelling’, and would ‘secure the long-term future of Australia’s northern pastoral industry.’

“The economic benefits extend well beyond northern Australia and we believe will also have substantial positive flow-on effects for our northern neighbours,” Mr Farley said.

Subject to final project endorsement by the AA Co board to proceed with the development, the proposed Darwin Meat Processing Facility would be developed at a cost of about $83 million, including land, the ASX statement said.

The plant would be built as a hot-boning facility with flexibility to incorporate chillers when required, and a designed annual capacity of up to 225,000 head. Actual throughout would be about 180,000 head once full production levels were reached.

“The project is forecast to meet return criteria established by the AA Co board,” the statement said.

“The Board will review the final tendered delivery costs prior to construction commencing to ensure these benchmarks are achievable.”

While AA Co was prepared to invest 100pc of the required capital, the company would seek investment partners in the facility and would retain a minimum of 50pc of the equity in the company developing the Darwin meat processing facility, to be called Northern Australian Beef Ltd.

AA Co claims the new facility would be ‘state-of-the-art’ and when operational, would have the capacity to process up to 1000 head a day at full production, creating up to 260 full-time jobs including substantial new opportunities for indigenous and female workers in the region.

“It will be efficient from a carbon emissions standpoint, and improve animal welfare outcomes,” the statement said.

Mr Farley said a possible move by AA Co into meat processing was a natural next step in vertical integration, particularly given the company’s proximity to the growing Asian markets and the quality of its end product.