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UPDATE 1-Strikes force mill shutdown at Australia's largest sugar maker

(Updates with company and cane grower comments in paragraphs 6-9)

By Peter Hobson

CANBERRA, June 12 (Reuters) - Australia's largest sugar producer temporarily halted operations on Wednesday at a mill that began processing cane two days ago, after unions agitating for better pay said workers would lay down tools, the company said.

The mill in the Burdekin region is the only one of eight run in Australia by Wilmar Sugar and Renewables that has begun its cane crushing season, with the others due to begin operating by the end of next week.

The start of processing at all eight mills was delayed by the pay dispute, which poses an increasing threat to Australian sugar production and exports as it could shorten the crushing season and cause cane to be left unharvested.


The cane crushing season on Australia's hot and humid northeast coast begins in June and runs to around November.

"The only sugar mill operating in the Burdekin, Inkerman Mill, has been forced to shut down overnight after union delegates advised that workers plan to stop work at that site, and at least two other sites, for one hour at midday today," Wilmar said in a statement.

The company later said it aimed to resume crushing as soon as possible on Wednesday afternoon and would start two more Burdekin region mills, Invicta and Kalamia, on Thursday despite the threat of continuing industrial action.

Wilmar operations manager Mike McLeod said the company had stopped the mill - a process that takes about 12 hours - for operational and safety reasons because it was unclear whether workers would stop work again on Wednesday, something a union representative said was not true.

Cane growers said they had been blindsided and disappointed when told late on Tuesday the mill would shut without processing cane that was already being harvested.

Wilmar was "only using this as an opportunity to apply leverage against the unions," the local wing of the CANEGROWERS industry group wrote in an email to members seen by Reuters.

Wilmar Sugar and Renewables produces over 2 million metric tons of sugar a year, more than half of Australia's total production. It is owned by Singapore's Wilmar International .

Unions want an 18% pay increase over three years. A company offer of 14.25% over 3.5 years and an A$1,500 ($1,000) sign-on bonus was rejected by workers at a vote this week, leading to a resumption of short-term work stoppages and bans. (Reporting by Peter Hobson; Editing by Sonali Paul and Jamie Freed)