News

MEDIA RELEASE 

18 September 2024

RIO TINTO PARTNERS WITH MIDWAY LIMITED TO MANAGE PONGAMIA RENEWABLE DIESEL PILOT

Midway Limited (the Company) is pleased to announce it has been appointed by Rio Tinto, to develop Pongamia seed farms to test its viability as a sustainable renewable diesel feedstock.

Midway will design, execute and manage approximately 3,000 ha of Pongamia seed farms and associated biodiversity plantings from a new office in North Queensland. The team will employ from local communities and businesses, contributing to the region’s economic growth.

Midway has also been contracted to provide land acquisition, due diligence advice, farm and irrigation development, operations management, project management, and carbon related consulting services.

Pongamia, Millettia pinnata, is a medium sized, fast-growing tree or shrub, that produces seed with a high oil content.  Renewable diesel is a drop-in alternative to fossil diesel fuel. It is made from fats and oils and emits significantly less carbon emissions than conventional diesel, over the lifecycle.

Tony McKenna said: “We are delighted to have been appointed to partner with Rio Tinto to help them achieve their biofuel ambitions.

This is a significant achievement for the carbon team at Midway and we are very excited to be partnering with Rio Tinto on this innovative pilot project.  The collaboration reinforces our reputation as trusted advisors with the capability and experience to deliver large scale carbon abatement projects for emitters who are committed to reducing their net emissions.”

Rio Tinto Chief Decarbonisation Officer Jonathon McCarthy said: “While we have successfully integrated renewable diesel in our United States operations, Australia currently lacks a sufficient biofuel feedstock industry to meet domestic demand. The pilot represents an important step in helping to bridge that gap and advance our decarbonisation goals.”

“Developing a sustainable biofuels industry in Australia could enhance the region’s fuel security, create local economic opportunities, and contribute to emissions reductions targets. We are excited about the potential of the Pongamia pilot and look forward to partnering with Midway Limited and north Queensland communities.” 

Biofuels are playing an increasing role in Rio’s decarbonisation strategy as they provide an opportunity to reduce fossil diesel use, and the emissions generated, while electrification technology develops.

Rio Tinto has converted two US mining operations to renewable diesel over the past year and has been working to better understand the biofuels industry, market conditions and opportunities in Australia.

Georgie Morell
Investor Relations and Media Adviser
T: +61 438 008 383
E: georgie@morellandco.com

Rob Bennett
Company Secretary
T: +61 438 556 145
E: rbennett@midwaylimited.com.au

About Midway Limited

Founded in 1980, Midway Limited is one of Australia’s largest woodfibre processors and exporters with a strong and growing plantation and carbon management business.  Midway’s fibre is used in recyclable paper and packaging, plastic replacement products and coal replacing energy generation in the Asian region.  The Company is building a plantation carbon management business to generate carbon abatement and emissions offsets solutions utilising its expertise in the process.  Midway has woodchip processing and exporting operations at five major port locations in key forestry areas around Australia including: Bell Bay, Tasmania; Portland and Geelong in Victoria; Brisbane, Queensland; and Melville Island in the Northern Territory’s Tiwi Islands.  For further information, visit www.midwaylimited.com.au.

Australia’s forest industries will celebrate National Forestry Day on Tuesday 20 August 2024.

National Forestry Day is a time to recognize the work that the Australian Forest Industry does to combat climate change, support the national economy and create the essential and sustainable products that Australians need and use every day.

The year’s theme is “Celebrating Nature’s Carbon Store,” highlighting how important our sector is as a climate change solution. As production trees grow, they absorb carbon, which continues to be stored in timber, wood fibre products and the built environment, long after the trees are sustainably harvested.

It is estimated that the current carbon storage of plantation trees within Midway’s defined forest area is just under 2.5 million tonnes of CO_2-e.

CEO and MD of Midway Limited, Tony McKenna, presented at the Australasian AgFood Conference hosted by PAC Partners and Commonwealth Bank this week. 

Midway shared its carbon strategy, addressing emissions solutions for investors, landowners, and emitters. The event focused on innovation, access to capital, and resilience in Australia’s Agri industry. Please link here for details.

Today Midway announced the following positive earnings guidance to the ASX. This is a pleasing improvement and demonstrates progress in our strategic approach:

Earnings Guidance

It is likely that Midway’s FY 2024 EBITDA-S will be in the range of $10M to $15M.  This update is in line with the guidance provided at the AGM of a level of sustainable earnings through the cycle of around $10M to $15M. 

The guidance primarily reflects the previously announced improved sales volumes for January and February 2024 and recently, the  decision by key customers to confirm delivery schedules for previously deferred CY23 contracts.  Other drivers include the continuation of some favourable carry-over 2023 pricing, better FX and dry fibre content, and a contribution from CIF sales.

Earnings guidance is subject to a range of market variables as outlined at the end of this update.  In particular, uncertainty remains in relation to the CY24 headline pricing, the risk of vessel deferrals as well as general market conditions, both of which may impact volumes.

Midway CEO, Tony McKenna said “I am very pleased that we are starting to see some positive results and a demonstration that our strategy is on track.”

Headline Price

The headline FOB price for E. Globulus (EG) from Australia to Japan for calendar year 2024 has not yet been settled. The price, which acts as a benchmark for the majority of woodfibre sales, is currently set between Australia’s largest EG exporter (New Forests) and Japan’s Nippon Paper. Over the past five years the price has been set at a time between February and July.

It is considered likely that the EG headline price for the current half will be lower than 2023’s price of USD198.75.

Midway is currently shipping some 2023 contracted vessels at 2023 prices and some vessels are shipping based on provisional pricing that will be adjusted once the headline price is set.  As the headline FOB price for EG has not been settled, new sales at an unknown price are proving difficult to secure, particularly for our joint venture company, South West Fibre.

Outlook

China Bleached Hardwood Kraft Pulp prices have risen to a 2024 high of USD 715/t, up from last year’s low of USD 450/t.

Some softness continues in the demand for Australian woodfibre as many Chinese customers are seeking to preference the use of domestic logs and Vietnamese fibre.  Demand from two major new mills in China, scheduled to commence operations in the second half of calendar year 2024, is expected to substantially tighten the regional supply / demand woodfibre balance.

The Company’s FY24 guidance remains subject to a range of variables, including:

– Sales volumes;
– Timing of vessel shipments, some of which remain subject to deferral/slippage;
– The fact that the headline FOB 2024 price for EG is yet to be determined;