Milne spends big on mill

Milne Agrigroup will invest more than $20 million to build a new compound stock feed mill after selling its landmark Welshpool site.

Last week, the group announced it had leased the former Chemeq facility in East Rockingham, as well as plant and equipment, for 40 years with an option to purchase.

The existing Chemeq facilities include laboratories, offices, a production facility and pharmaceutical-grade areas for formulation which will be incorporated into Milne's business activities and will be the site for the group's research and development centre.

Milne Agrigroup managing director Graham Laitt said the move followed the sale of the Welshpool site, at the corner of Welshpool Road and Leach Highway, which has been leased back from the purchaser, Woolworths subsidiary Oxygen Pty Ltd.

"After 100 years at Welshpool it is time for Milne to build a state-of-the-art feed mill to ensure that we continue to supply the best feed solutions for our customers," Mr Laitt said.

"The Welshpool mill will continue to operate for a number of years because our first priority is to ensure that we are always able to supply our customers and their livestock that depend on us.

"This move implements the first step in our strategy to relocate and to significantly increase our effective production capacity to keep pace with customer demand."

Construction of the new mill will start next year and will be purpose-designed to produce Hyfibre products, made since 2006, resulting in farmers switching from home mixing to Milne's compound feed.

The mill will have the latest technology to ensure precise measurement and control at each stage of the process and advanced handling technology for quality control.

"The strategy will result in a more than doubling of our production capacity and will ensure that in drought years there is adequate capacity to meet the State's needs," Mr Laitt said.

"The new mill will have a high degree of automation so we do not expect to increase staff numbers on that account and we do not expect to need to make redundancies because we will be expanding our business operations overall."

Milne Agrigroup last year turned over $120 million and is forecast to grow to $140 million this year.

The new mill is expected to be operational next year and will help supply 14 depots throughout regional WA with compound feed.