Sugar Terminals Limited has announced it will take over operation of bulk sugar terminal facilities located at Cairns, Mourilyan, Lucinda, Townsville, Mackay and Bundaberg.
The facilities, that store and handle raw sugar, are owned by STL but currently managed by not-for-profit operator Queensland Sugar Limited.
QSL has been issued a "surprise" termination notice by STL, according to chief executive officer and managing director Greg Beashel.
"QSL has a long and proud history of operating Queensland's bulk sugar terminals and we are disappointed that STL would take such a unilateral action providing only vague and inaccurate justification in their public announcements," Mr Beashel said.
"As a material shareholder of STL and the largest BST customer, QSL can see no business case that justifies the termination of the existing Operating Agreement and the insourcing of operations to STL.
"STL must consider the full transitional costs for shareholders, as well as the loss of the considerable ongoing savings and benefits delivered through QSL's not-for-profit status."
STL chair Mark Gray has stated managing the terminals the company owns will streamline operations, eliminate duplication, and remove the "inherent conflicts of interest" in the current outsourced arrangements.
"Removal of duplication in corporate overheads will ultimately deliver a permanent reduction in costs," Mr Gray said.
"A simplified structure with STL having direct operational responsibility will remove the inherent conflicts of interest that arise due to the circumstances in which the current operator is also a customer."
Mr Beashel from QSL strongly refuted STL's position that a perceived conflict of interest provided grounds for justifying termination.
"QSL has always taken our robust ring-fencing obligations seriously, which are similar to those in other industries, to ensure QSL's Operations and Marketing divisions are managed and operated separately," Mr Beasley said.
"These provisions have been extremely effective, with all independent external audits confirming compliance."
Around 150 people are employed at the terminals but STL confirmed no jobs would be lost and it was committed to offering all site based operational employees to continue their roles.
Canegrowers chairman Owen Menkens has also raised concerns what the termination of the agreement between QSL and STL would mean for costs to farmers and why no consultation took place.
"These terminals are industry assets, and they remain one of our main competitive advantages, allowing Australian sugar to be traded as a reliable, high quality, sustainable product into our most valuable markets in a timely manner," Mr Menkens said.
"STL have not consulted with anyone in industry about this matter and they have chosen not to make it clear that their agreement with QSL has a three-year notice period.
"There is no disputing that QSL has operated the terminals safely and efficiently, and its performance has been highly scrutinised."
QSL will continue to be the operator until June 30, 2026.
