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No substance behind rumour that JBS may purchase Darwin’s mothballed Livingstone Beef plant

Jon Condon 05/02/2025

THERE’S nothing behind a rumour circulating in the beef industry this week that JBS may be poised to buy or lease the mothballed Livingstone Beef processing plant south of Darwin.

JBS Australia told Beef Central this morning there was no foundation to the industry chatter.

The company confirmed that it had made an inspection of the site – along with a bevy of other processing stakeholders – in the latter stages of 2024, but there had never been any intention to make an offer.

Others have speculated that the suggestion that JBS is interested in Livingstone may have been designed to kindle some buyer tension in the market.

Current spectacular prices being seen for Australian lean beef trimmings in the US market (last week quoted at record highs of A$10.66/kg landed US, CIF) have inevitably fuelled speculation about Livingstone, given that cow slaughter would be a fundamental part of any plan to bring the plant back to life.

Back in October, Beef Central published this item, flagging that Livingstone’s owner and developer, the Australian Agricultural Co, was ‘quietly probing’ sale options for its Livingstone plant.

AA Co had engaged Melbourne-based advisory firm Kidder Williams to undertake a low-key attempt to find a buyer for its mothballed Darwin beef processing plant.

The discrete ‘off-market’ approach had engaged with ‘20 or so’ potential domestic and international buyers, Beef Central was told at the time. A number of large processing, beef and cattle entities, both Australian and offshore –confirmed that they had been approached over the preceding couple of weeks.

An agribusiness source said it had become an open secret during October that AA Co was more actively trying to find a buyer for Livingstone, which has remained idle since being shut suddenly in 2018, due to unsustainable operating losses.

Speculation suggested an asking price of somewhere between $50m and $75m, but others said that was wide of the mark.

“It’s only worth what someone will pay for it – a loss-making processing plant’s value has little to do with replacement or construction cost,” one source said.

Beef Central asked whether a joint-venture involving AA Co might be one of the options under the sale process, but the contact insisted the focus was on outright sale.

Since 2018 AA Co has consistently stressed that the mothballed Livingstone facility has been kept well maintained and serviced, with a view to a potential re-start at some future time. The company spent about $108 million on its original development.

Potential buyer inspections of the Livingstone site took place during November, Beef Central understands, but one contact warned not to misinterpret an ‘inspection’ as necessarily a serious intent to buy.

Australian Agricultural Co chairman Donald McGauchie told shareholders during last July’s annual general meeting that the company was undertaking a strategic review of all assets. Along with its other properties, the review would consider the best way to utilise the Livingstone processing facility, he told shareholders at the time.

“We have said for a number of years that we believe the asset has strategic value,” Mr McGauchie said.

“We have continued to maintain the facility with the knowledge of those potential future prospects. We are open-minded about the opportunities that will achieve the best value for shareholders, and look forward to sharing more details of the strategy and opportunities that we are pursuing in the near future.”

Beef price cycle

While the big change in US domestic beef supply has taken far longer than what many anticipated, all stakeholders see strong opportunities for manufacturing type meat prices over the next two years, as the US herd rebuild commences. That aligns nicely with Livingstone’s primary raw material source of cull cows and bulls.

At the time Livingstone’s doors were closed back in 2018, lean Australian beef trimmings into the US market were worth about 560c/kg, in Aussie dollar terms. Prices this month are not far off twice that figure, making the sums look very different.

If ever there was a time for Livingstone to re-activate its chain, this could be it – but the challenge, as always, is what happens in the next price down-cycle that follows. Regardless of its current potential to make money, any re-opening would need to ride-out both the peaks and the troughs.

Short three-year operational history

The Australian Agricultural Co built the Livingstone plant under much fanfare in 2014-15 at cost of around $108 million. It closed in mid 2018, barely three years after being commissioned, after AA Co racked-up a statutory net loss after tax of $102.6 million for its full 2017-18 financial year, including a one-off write-down of $74.9m.

In an investor and analysts briefing in October 2015, the company said Livingstone was ‘now adding positively to the company’s bottom line.’ The original intention was to eventually double-shift the plant, killing up to 220,000 head of northern cattle each year.

During the official opening of the plant in February 2015, AA Co chairman Donald McGauchie described the facility as ‘transformational’. The Prime Minister of the day, Tony Abbott, said the project was the biggest private sector investment in agriculture in northern Australia ‘for many a long year.’

 

 

 

 

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