February 2010 Welcome to our news page! We try to bring you the latest news and comment on this page but it will always be a better place if you send us your news. You can write to us by clicking on the Contact link at the left. Quite a juicy month this time : STOP PRESS CSR DEMERGER BANNED As we went to press it was announced that the Australian Federal court had found against CSR in its application to carry through the demerger of its sugar division. Part of the reason given was to do with CSR's liabilities for asbestos related health damage. The implications of the finding are not yet clear [back to business as usual or sell to the highest bidder - see below] so watch this space! WORLD PRICE The world price peaked at just over 30 ¢/# at the end of January so the chart needs rescaling yet again : 
Part of the increase may have been because Indonesia couldn’t find any physical sugar to buy at its recent tender [well, not at a price it was prepared to pay]. Only Egypt of the large importers is thought to have adequately covered its raws requirements. As has been stated many times before, much of the cause of this price rise is the unreliability of India’s crop, something which is likely to continue : mills in Uttar Pradesh, the state immediately to the east of Delhi, are reported to be crushing only about 400 000 t/d of cane [just 52% of installed capacity] due to the shortage of cane. EU EXPORTS The Brazilian industry has written to the EU, telling it not to listen to some of the member states which are asking for an increase in the WTO set amount of sugar exports because the world price is higher than the internal price so there would be no dumping. The Brazilians are caring people : they are concerned that some users within the EU ‘could be left without sugar they are counting on’. TATE & LYLE An analyst’s note was published during January suggesting that T&L should sell its remaining sugar assets to avoid being the next target for heritage brand buyers [Kraft having just bought Cadbury]. That does rather beg the question of who on earth would consider such a purchase when the company is struggling to find enough raws to refiner? Would it suit British Sugar [don’t convert Cantley after all or convert it and other beet factories so phasing out Thames]? Would BS be allowed to buy T&L Sugars? TURKEY Last month we reported that Savola was withdrawing from its proposed bid for some beet factories about to be privatised. Perhaps that was not relevant as the country’s courts suspended the tender process in January, upholding an appeal from the sugar workers’ union to do so. EGYPT A company called Sinai Sugar is proposing to establish another beet factory, this time in the are around Ismailia. The cost is reported to be around $80 million with production set at 40 000 t/annum, due to start in 2011. As the existing factories already struggle to find sufficient beets to process, it is unclear how this new factory will succeed. Meanwhile, the government has confirmed that it has extended the duty exemption introduced in 2009 to help control domestic prices. About 80% of the country’s 80 million population is entitled to subsidised sugar in a programme which costs the government some $800 million and leads to the 35kg/person/annum consumption, over 40% of which has to be imported. CARGILL EGYPT Cargill has apparently applied for a licence to build a sugar refinery in Egypt. If granted, the refinery would be located close to the north eastern mouth of the Nile near Dumyat but no technical details are available at the moment. KENYA Kenya has firmed up on its sugar privatisation schedule, saying that prequalification will take place in February 2010 with completion taking place in June (!). 51% of each of the five factories is to go to the private sector with 30% reserved for the relevant farmers and the remaining 19% staying with the government in the short term, ultimately being offered by IPO to the public. To the sweeten the deal, the government is writing off almost 80% of the US$ 560 million it is owed by the factories and converting the rest into equity [not sure how that works if it is already the 100% owner of all the factories?]. BAHRAIN REFINERY The long awaited announcement of the Bahrain refinery has now been made. The refinery is rated at 1800 t/d RSO and is reported to cost $150 million including the wharf facility which it will require. This company, SKIL, is the Client’s Project Manager. Completion is scheduled for late 2011. POWER PURCHASE INDIA The state government in Karnataka – as state which is chronically short of electricity – is refusing to pay last year’s export price of Rs 6.5 per kWh and the millers are quoted as saying that it would not be feasible to accept anything below Rs 5.50 per unit given the cost of generating the power. You have to ask why the millers didn’t enter into a long term contract but when you realise that Rs 6.5 is about US 15¢ you can have little sympathy with them. THAILAND The Thai millers are concerned about proposals from the recently formed Energy Regulatory Board which is threatening to tighten environmental requirements and apply them to all existing power stations, defining such as producing 10 MW or more of electricity. Even the USA doesn’t do that, granting existing plants exemptions under the ‘grandfather’ rules. CAMBODIA Khon Kaen Sugar has reported that has started crushing at its Koh Kong factory in Cambodia, not far from Thailand’s south eastern border with western Cambodia. It is reported to be Cambodia’s first operating factory although we have reported in the past that Mitr Phol is also building a factory in the country. Meanwhile an Australian venture capital fund is reported to be ready to invest US$600 million in agribusiness projects in Cambodia. Sugar is one of the target crops if the investment happens. CSR CSR has received its first unsolicited bid for its about to be demerged sugar division from a Chinese company called Bright Food which is apparently part-owned by the Shanghai Municipal Authority. The offer, Aus$1.5 billion in cash [US$1.4 billion], was immediately rejected by the CSR board as a ‘mere expression of interest’. The company is continuing with its plans to demerge the sugar division with a court hearing to approve its proposals scheduled for early February. NEW MILL FOR QUEENSLAND North Queensland Bio-Energy has been formed to establish a crystal sugar/ethanol/export cogeneration factory near Ingham. It already has 2.1 million t/a of cane pledged and seems to be attracting growers by offering a different economic model as only first expressed juice will go to sugar production as in Brazil. The company has stated that part of its strategy is to develop high fibre cane to boost the energy output but not from electrical sales, it sees 2nd generation cellulosic ethanol as the way forward. FLORIDA WEATHER The Florida cane fields were at least partly frozen in the second week of January with air temperatures several degrees below freezing recorded. The hope must be that the damage is not as severe as 21 years ago when the smell of rotting cane hung over southern Florida. At the end of the month, the USDA designated 60 of Florida's counties as ‘primary natural disaster’ areas because of the freeze. That means that some farm operators will be eligible for low interest emergency loans. LOUISIANA WEATHER Following on from our report on the rains affecting the Louisiana crop in December, our local correspondent has told us about the freeze that followed and sent us some interesting pictures of icicles hanging off of the main carrier. Luckily it came as virtually all cane was in so the problems were not the same as those facing Florida. ANOTHER LOUISIANA REFINERY As the people at Gramercy prepare to start work on the new Imperial/Cargill/Cooperative refinery, news arrives of another refinery for the state, this time sponsored by Billy Patout in conjunction with Amalgamated. It is reported that the refinery, if built, will be rated at 400 000 t/a RSO and be located at Enterprise. At that size it would be capable of refining all of the Patout factories’ output. BUNGE IN BRAZIL II Bunge has sold its Brazilian fertiliser business for $3.8 billion to create a ‘war chest’ for more acquisitions [or reduce its debt mountain, depending on how you look at it]. It has also paid an additional $240 million to the Moema group so that it now owns virtually 90% of the Brazilian group, up 30% from the ownership which we reported here last month. BETTER BEETS ON THE WAY? BASF and KWS, the German beet seed company, have announced a collaboration to develop higher yielding beets with the objective of achieving 20 t/ha sucrose by 2020. There was no mention of transgenic [GMO] work anywhere in the announcement. 
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