Africa Sugar Digest, Volume III – Number 7, 28 July 2012

Contents:

* Kenya: Mumias seeks USD 400 million for new plant
* Zimbabwe: Government takes over USD 600 million ethanol project
* Sudan: One billion dollar investment in sugar
* Swaziland: Ubombo Sugar said cane trash worth more than cane
* Tanzania: Egyptians to invest in sugar
* Mauritius: Sugar companies to merge

Kenya: Mumias seeks USD 400 million for new plant

Mumias Sugar plans to raise USD 400 million for a new sugar estate aiming at doubling production within three years, said the company’s chief executive in late July. According to the officer, the company plans to produce 200,000 tonnes of sugar per year in the country’s coastal region, in addition to the 250,000 tonnes a year it already produces in the western region.

With coastal region conditions where cane matures in 10-12 months, compared to the 18-20 months needed in the west, Mumias expects to reduce production costs by 30 per cent. The project is planned via the Tana and Athi River Development Authority on a 16,000-hectare plantation and some 4,000 large scale growers. The company currently deals with over 100,000 farmers who on average cultivate less than one hectare each.

Kenya’s annual production is about 500,000 against annual consumption of 850,000 tonnes. The company forecasts that national demand will rise to 1 million tonnes per year by 2015.

Zimbabwe: Government takes over USD 600 million ethanol project

Local newspapers reported on 11 June that the government took over the USD 600 million Green Fuel ethanol project, following the country’s economic empowerment laws.

Green Fuel is a joint venture between the state-run Agriculture & Rural Development Authority (ARDA) and private local investors but, according to statements by the Agriculture Minister, Cabinet found that the Build, Operate and Transfer (BOT) agree­ment, under which the project was developed, was null and void because it had not been autho­rised by government. The minister said government took over a 51 percent stake in the company, 10 per­cent was transferred to the local com­munity, and private investors retained 39 percent. The ownership restructuring, added the minister, is in line with the Zimbabwe’s indigenisa­tion and empower­ment laws.

In late May, other ministers became involved in the controversy on the 20-year Build, Operate and Transfer (BOT) agreement, which used estates at Chisumbanje and Middle Sabi. The Finance Minister said the project had taken huge ARDA estates to grow sugarcane plus the Zimbabwe Development Trust with lands in Naunetsi. Green Fuel, added the minister, took about 4 percent of Zimbabwe’s total area, and the land “was not bought, it was taken for free.”A second issue in the controversy was the impact of ethanol on car engines on which, according to the Finance Minister, scientific information must be given about the percentage the mixture should be. Finally, a third issue was pricing the ethanol in relation to fossil fuels. According to newspapers the Energy Minister also intervened and said that “mandatory blending would go against market liberalisation in the petroleum industry.”

The chairman of ARDA, however, has insisted that the BOT agreement is still binding, and that the project, from  its inception to the present, had been developed “with full information being relayed to (the) parent Ministry on a weekly basis.” Green Fuel officials have previously said that the project complied with the indigenisation laws, since the private investors are Zimbabwean.

Green Fuel had tried to sell its E10 product (10 percent mixture of ethanol in gasoline) on the local market, while the government has resisted the company’s lobbing to introduce a mandatory blending. Production stopped at the Chisumbanje plant after its storage capacity was reached in December last year, with some unsold 10 million litres of ethanol.

Sudan: One billion dollar investment in sugar

Sudan started works on 11 July at the much-delayed White Nile Sugar Co., which has a price tag of USD 1 billion. It is Sudan’s biggest industrial development in several years. The company was set up in 2004, although its opening was delayed because of the trade embargo imposed since 1997, according to Khartoum. The new factory aims at an annual 450,000 tonnes of white sugar within three years, with initial annual output of 150,000 tonnes. Sudan’s Kenana Sugar Co., owned mostly by Saudi Arabia, Kuwait and Sudan, holds the largest stake in the new company.

Swaziland: Ubombo Sugar said cane trash worth more than cane

Ubombo Sugar (Illovo) Managing Director Simon Cleasby said recently that small-scale cane farmers could actually make more money from the sale of cane trash than from selling cane, because trash prices are currently higher than cane’s. The officer said the company had offered to buy smallholder farmers’ cane trash at E280 per tonne (USD 1.00=E8.014) which, in addition to bagasse, they use to cogenerate electricity. Ubombo, he added, has started mechanical harvesting to retain the trash and fields will not be burned prior to harvesting as it is usually done. Illovo Sugar has a majority stake in Ubombo.

On average, a hectare of sugar cane generates about 10 tonnes of trash. During harvesting, it is estimated that between 70-80 percent of the trash is left in the fields, while the rest is delivered to the mill together with cane stalks as extraneous matter.

Tanzania: Egyptians to invest in sugar

Egyptian African Company (EAC) in partnership with a local firm, Agro Forest Plantation (AFP), will develop a sugar factory in the Rufiji District, planned with a daily production of 750 tonnes of sugar,  processing cane supplied by a plantation of about 16,000 to 20,000 acres of land. An EAC spokesperson said they are investing USD 200 million, and production will start in October 2014. He added the company is also in the process of acquiring 50,000 hectares in Kigoma region in the western part of Tanzania to set up a processing plant for palm oil and sunflower, as well as edible oil factories.

Mauritius: Sugar companies to merge

The merger of Mauritian companies Deep River Beau Champ Limited (DRBC) and Flacq United Estates Limited (FUEL) will create Alteo Limited, reckoned to become the largest sugar milling company on the Indian Ocean island, which would help companies to adapt to changes in the sugar market. The new company will control about 45 percent of milling capacity in Mauritius, and production is expected to increase from 90,000 to 100,000 tonnes in the short term.

DRBC owns 4,000 hectares under cane on the eastern part of the island and produces 80,000 tonnes of sugar per year, of which about 25,000 tonnes are under the special sugars category, that is sugar refined on the island to add value. DRBC also produces electricity. FUEL grows cane on 8,000 hectares of land, and also cogenerates electricity.

In Tanzania, Deep River Beau Champ has a majority ownership of TPC since 2000. It grows cane in 8,000 hectares and produces about 90,000 tonnes of sugar per year. The new company plans to raise its Tanzania production by 11 percent in the near future.

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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, Volume III, No 7, 28 July 2012 – Download here.

 

 

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