Sugar dealings by Wilmar International

In the first months of 2014, Wilmar International Ltd., the world’s top palm oil company and one of the world’s biggest raw sugar producer and refiner, has been quite active in the sugar sector.

Wilmar and Shree Renuka in India and Brazil

A flurry of sugar activities started on 20 February with the announcement of a deal with Shree Renuka Sugars (SRS), the Indian /Brazilian company that controls eleven mills (four in Brazil, seven in India) and two refineries (India). Wilmar Sugar Holdings, a subsidiary of Wilmar International, acquired 27.5 percent of SRS for an estimated USD 83 million, and both Wilmar and SRS will jointly invest USD 117 million. As the deal stands, it gives the partners a joint control of the company, with 27.5 percent stake each. (A mandatory offer to buy from minority stakeholders in underway.)

Shree Renuka is listed with an annual production of 1.7 million tonnes of sugar and a milling capacity of 7.1 million tonnes of cane in India; while in Brazil, it owns about 100,000 hectares under cane, controls an annual milling capacity of 13.6 million tonnes, and ethanol production of some 4,160 cubic metres (1.1 million US gallons).

Wilmar in Burma

On 14 April, Wilmar announced a first investment in Burma’s sugar sector, a joint venture with a Burmese group, the Great Wall – Wilmar Holdings (JVCo). The deal includes two sugar mills, with a combined 4,000 tonnes of daily crushing capacity, a production of 65,000 tonnes of sugar per year, an ethanol plant and a fertilizer plant. Wilmar will hold a 55 percent stake in the venture. (At the time of writing, the deal was still subject to regulatory approval.)

Leaving Queensland’s single-desk sales?

At about the same time of its Burma’s announcement, Wilmar said it may end the arrangement with Queensland Sugar Ltd. (QSL), the Australian single-desk sales, which is due for renewal in June 2014. If terminated, the agreement will expire in 2017, and Wilmar will have an in-house sales facility to market about two million tonnes of sugar per year. QSL exports about 3 million tonnes sugar per year and Wilmar’s move would put QSL’s existence in peril. Wilmar entered the Australian sugar sector in 2010 with the acquisition of Sucrogen Ltd. Nowadays, Wilmar Sugar Australia is the country’s largest sugar producer.

Paraquat use: from palm oil to sugar

In December 2013, Wilmar International announced its “No deforestation, No Peat, No Exploitation Policy” for the palm oil sector. Interestingly enough, the policy prohibits the use of Paraquat in all Wilmar’s farming operations and calls to have its suppliers to do the same. With that precedent, it should be a positive development if the Paraquat prohibition is also made a policy in Wilmar’s sugar concerns and that of its cane suppliers.

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