CSR had little interest in the hill above the refinery. The small quarries had long been worked out, and some became illicit rubbish dumps. South of the hill, the Saunders Paradise quarry kept going until the 1920s, creating the escarpment which many Stonecutters residents now overlook.
Everything changed in 1900. Many of the sugar mills that sent raw sugar to Pyrmont (such as Harwood Mill on the Clarence River and Nausori in Fiji) also distilled alcohol by adding yeast to molasses. Australian Federation, the White Australia policy and the tariff preference for sugar produced by white labour, raised the risk that Fiji spirits might be barred from Australia. The Nausori distillery was promptly closed, and a new facility built at Pyrmont, sharing the power and steam generated in the refinery, and the deep water berths.
Once established, the distillery produced a widening range of industrial spirits as well as rum. As the complex expanded, rows of vats, first to ferment the molasses, and later to store a range of industrial chemicals, marched across the Stonecutters site down the hill (now described as Distillery Hill) towards Glebe Island Bridge.