March 2006 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. The EU is still the centre of attention. STOP PRESS ILLOVO BIDDING HOTS UP Further to this month's article, on March 10 Illovo announced that it had received a second bid from another European sugar manufacturer [again unnamed]. This offer is not a cash offer though : it involves the sale of various sugar assets to Illovo in return for Illovo shares. All that the company would reveal was that "both these proposals have been received from significant European sugar companies". SUGAR PRICE It looks as if sugar has hit its peak - at least in the short term. As can be seen below, it peaked at ~19.7 ¢/lb in early February and had backed off to about 16.5 by the end of the month. What nobody seems to be able to predict is what the price will stabilise - nor for how long. 
We will update the graphic from time to time. EU RATIFIES The EU's Council of Agricultural Ministers formally approved the proposed reform of the union's sugar regime on Tuesday February 21st with the changes to take effect from July 1st 2006. What is not clear is where that leaves the European Parliament which, as we have reported from time to time, disagrees with the depth of the proposed reforms. EU QUOTA CUT Throughout February the EU Commission was signalling that there would be 'one-off' quota cuts on sugar production for 2006/7 in order to redress the imbalance that would result from the export reduction required by the WTO. As we went to press it looked as if the Commission would impose a quota cut across the whole of the EU of 2.5 million tons or some 15% of the total normal production. Some of that might be taken up by the closures reported below. EU REFORMS : CLOSURES START Announcements about closures following the agreement on the EU reforms have already started :
CSM, the Dutch sugar producer is not closing its one remaining sugar factory however : it wants to sell the sugar business as a going concern. One has to ask who would buy such a business in the current European climate. NEW TYPE DIFFUSER SUCCESSFULLY COMMISSIONED We hear that Bosch Projects have successfully commissioned their new 'moving floor' diffuser at the Union Co-op factory, Dalton South Africa. The mechanism is simple and requires little power : no chains, no large drive shafts. We look forward to hearing that the unit performs well over this crop and expect to see other factories adopting the design. UGANDA The privatization of Kinyara seems to be in trouble again. Now that the elections are over, a report has appeared in the local press to the effect that President Museveni has directed the Ministry of Finance to offer the company to "a local firm", notwithstanding the current international tendering process. As the Madhvani group, owner of Kinyara's main competitor Kakira, is the owner local tenderer this is seen as an endorsement of a merger. TSB SWAZILAND Following last October's report that TSB was buying ~25% of Royal Swazi sugar, the deal has been approved by the Competition Commission in South Africa and therefore completed in February. BID FOR ILLOVO Somebody wants to buy Illovo Sugar, one of the two large South African sugar groups with operations in several parts of Southern Africa in addition to South Africa itself. The company made the announcement half way through February but did not say who the interested party is. Most analysts believe that it is a European group although one was quoted as giving India or China an "outside chance". Both Suedzucker and Tate + Lyle have been mentioned as possible buyers but we believe that it is another Western European sugar enterprise : one of our correspondents reports that British Sugar personnel have been seen visiting Illovo mills … watch this space! TEREOS BUYS INTO SENA Tereos, the new name for the now 'cooperativised' Beghin Say, has purchased 50% of Sena Sugar on the Zambezi in coastal central of Moçambique. Sena, which used to have two factories at Luabo and Marameo, has been owned and re-established by a consortium Mauritian sugar companies over the last 8 years or so. Whether selling exactly 50% is a good thing will remain to be seen. INDONESIA Indonesia has announced another new sugar estate for Banyuangi in East Java, apparently a Private/Public partnership. The factory, reported to cost $ ~80 million, will produce 70,000 t/a of sugar but the announcement also talks vaguely about ethanol, particle board and animal feed … BS ETHANOL We reported in November that British Sugar had applied for planning permission for an ethanol plant at Wissington, its flagship factory in East Anglia. Last month the company started construction of the facility, reported to be a 200,000 ?/d plant with a £20 million project budget. 
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