The China-based Complant International Sugar Industry Company Limited (CISICL) agreed on July 12 to buy for USD 9 million the Frome, Moneymusk and Bernard Lodge factories still owned by the Sugar Company of Jamaica (SCJ).
Complant will take ownership of the three factories by the end of the 2010 harvest year, allowing the government to fulfill the recently signed contract with Tate & Lyle to supply 100,000 tonnes of raw sugar in 2009/2010. It is said that the Chinese company would invest some USD 126.8 million (JMD 11 billion) to renew cane fields in all three estates and to improve the Frome and Monemusk factories. If feasibility studies recommend, the company will invest by May 2011 an additional USD 180 million (JMD 15.5 billion) in a sugar refinery, with a capacity of 200,000 tonnes aiming at supplying the local and regional markets. Complant will also lease 18,000 hectares of land at an annual rate of USD 35 per hectare for the next 50 years, with an optional 25 year lease extension.
According to the Minister of Agriculture, who announced the deal, the country will receive USD 9.63 million (JMD 828.6 million) in the first year of the agreement, including the sale, and USD 634,000 (JMD 54.6 million) per year from the lease payments thereafter.
The deal, which comes after two failed attempts to sell the SCJ assests, will make Complant the largest sugar group in Jamaica, and, if the refinery is built, a Jamaica-based sugar company with a strong Caricom profile.
The SCJ was purchased by the Jamaican government in 1998, in an attempt to revitalize the sector, but the company went to accumulate some USD 210 million (JMD 18 billion) in debt.
The Long Pond situation
In June 2009 the government sold the St. Thomas and Long Pond (Trelawny) factories to the Golden Grove Sugar Company and Everglades Farms Limited respectively, for a total of USD 2 million.
This harvest has seen a dismal performance of the Long Pond factory, with a total production of only 1,400 tonnes of sugar from a reported 34,847 tonnes of canes (making a ratio of 24.9 tonnes of cane for 1 tonnes of sugar!) The company said it will not operate next year because it will make multi-million dollar repairs of the factory’s defective boilers.