Africa Sugar Digest, Vol. I, No 18, November 2010

Kenya: Privatisation of sugar mills approved by Cabinet

Kenya’s Cabinet has approved the sale of five mills: the Nzoia (with a listed capacity of 54,000 tonnes of sugar per year), Chemelil (36,000 t), Sony (78,000 t), Muhoroni (40,500 t) and Miwani. The latter two mills are under receivership.

It is said that the five mills carry a USD 525 million combined debt with the government and the Kenya Sugar Board, and need USD 721 million to modernise production, and it is also reported that a significant portion of debt will be written off. The divestment process may be completed within six months, which some think will help the sector to prepare itself to face competition from producers in the Common Market for Eastern and Southern Africa (COMESA), as the sugar safeguards granted by the regional bloc expire in February 2012.

Local newspapers said a 51 percent stake in the mills will be sold to a “strategic investor,” 30 percent will be offered to farmers, and the remaining 19 percent will be floated in the stock exchange. According to regulations, public listings would happen only after the companies post profits for three consecutive years.

Whether the privatisation process would be successfully implemented – after years of false starts – is still to be seen, and the sector continues experiencing problems. The most recent one is a legal suit against the Kenya Sugar Board launched by West Kenya Company on the permit issued to Butali Sugar Mills to build a factory (1,500-tonne daily capacity) within less than 24 km from their factory. The new factory, it is alleged, will cause a deficit in the cane supply to West Kenya, which claims to have the right to a cane zone with a 24km radius since 2004. Kenya expects a production of 550,000 tonnes of sugar this year.

Ghana: Brazil to establish an ethanol factory

The Brazilian government is to establish a USD 300 million sugar cane plantation to produce over 26.4 million gallons (100 million litres) of ethanol at Makango, near Salaga in the Northern region, said the Brazilian Ambassador to Ghana in an interview with the local press. The factory will also generate 42 Megawatts (MW) of electricity using bagasse. The factory will use seven MW for own operations, and will sell 35 MW to the national grid. Local press said that ethanol would become Ghana’s fourth major export after cocoa, gold and timber.

Sudan: White Nile to build ethanol and animal-feed factories

Sudan’s White Nile Sugar Co. announced an agreement to build an ethanol factory and an animal-feed plant with China’s CAMC Engineering Co. The ethanol factory will produce 12.2 million gallons (46 million litres) per year, and the animal-feed plant will have an annual capacity of 100,000 tonnes. Construction is to start in January 2011, with the factories coming online in April 2012. The ethanol factory will be the country’s second facility. At present, Sudan produces some 17 million gallons (65 million litres) of ethanol per year and Kenana Sugar, the largest producer, plans to double its capacity by 2013. It is expected that Sudan will soon pass a law mandating a five to ten percent mix of ethanol in gasoline.

Sudan has five factories, producing 800,000 metric tonnes per year, which make the country the fourth-largest African sugar producer. Four factories are government-owned and the fifth is owned by Kenana.

Algeria: Cevital to increase refining capacity by 25 percent

Algeria’s biggest sugar producer, Cevital, plans to expand its Bejaia refinery by 25 percent next year said recently the company’s CEO. Cevital controls about 85 percent of the domestic market, with an annual refining capacity of 2 million tonnes. After investing USD 15 million, Cevital will increase production by 500,000 tonnes by 2011, with half of the added volume earmarked for exports. It was reported that basic infrastructure is in place, and therefore investments will not be high. Cevital’s main sugar markets are in India, Sudan, Tunisia, Iraq and Saudi Arabia according to the local media.

Cevital is a large conglomerate that employs some 12,500 people, and reports annual sales of USD 2.2 billion, of which about 60 percent comes from processing operations (oil, margarine and sugar). Earlier this year the company said it was looking for investors to establish a USD 8 billion solar power complex to generate energy for sale to Europe. It is also awaiting government approval for a deep-water harbour, a shipyard and other major projects.

SADC: Sugar producers complain of high scanning costs in Mozambique

Sugar producers from the Southern African Development Community (SADC) have expressed concern about the expensive scanning fees charged when exporting through Mozambican ports. Producers like Swaziland, Malawi, Zimbabwe and South Africa have brought the matter before the SADC Council of Ministers.

Scanning is described as a non-intrusive inspection of goods, but exporters say that sugar is shipped in non-scannable containers, which are not considered as a contraband risk, and the fees only make their sugar more expensive in foreign markets. For instance, it is said that exports of 600,000 tonnes of Swazi sugar through Maputo attract USD 525,000 in scanning fees.  Mozambican media said that SADC exporters have joined other exporters against the fees, which are deemed as “irrational and abusive.”

European Union: Uncertainties in raw sugar supplies

In early November the European Union cut its 98 Euro/tonne (USD 135) import duty on raw cane sugar to zero in order to help EU refiners securing supplies. The zero duty will be in effect from December to August 2011, and there is an imports limit of 660,000 tonnes. Licences for 250,000 tonnes have already been issued. High world market prices, which have reached 30-year highs, have disrupted supplies to the EU and are said to be behind the decision.

Africa Sugar Digest is produced thanks to the IUF Global Sugar project in East and Southern Africa. It appears as news becomes available. Contributions are welcome. The IUF African sugar project is supported by the Social Justice Fund of the Canadian Auto Workers (SJF-CAW), with contribution from the Canadian International Development Agency (CIDA) through the Labour International Development Program of the Canadian Labour Congress (LIDP-CLC).

Africa Sugar Digest, Vol. I, No 18, November 2010 – click to download –

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