March 2008 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. Predictably but tragically, the Savannah explosion on February 7 swamped out most other news... SAVANNAH EXPLOSION As readers of last month’s stop press news will know, there was a catastrophic explosion at Imperial Sugar’s Savannah refinery on Thursday February 7. By the end of February the death toll stood at 12 and 12 more people were still in a specialist burns unit, 11 of them described as ‘critical’. It took a week for firefighters to extinguish the fires in the refinery’s silos despite attempts to douse them with water from a helicopter. It will no doubt take months before the possible source of the primary explosion is identified but most industry commentators are suggesting an elevator. Why the explosion was not contained at that point is another issue. What has emerged is that there was a small explosion in ‘a piece of safety equipment’ a few weeks before the major event. WORLD SUGAR PRICE Following last month’s article on the world price, sugar continued to climb throughout February, ending the month heading for 15 ¢/lb : a level which surely cannot be sustained? BRITISH SUGAR RENOUNCES 13½ % OF QUOTA British Sugar – the only UK beet sugar company – has permanently renounced 165 000 tons of UK sugar quota, more or less in line with the European Commission’s requirements for the whole industry. The company has also applied to announce 26 000 tons in Poland but that has not yet been approved. The company will receive €93 million [US$143 million] in compensation for reducing its production, one third paid in 2009 and the remainder paid in 2010. During February the European Commission announced that insufficient quota was being renounced and threatened enforced reductions without compensation. If that becomes a reality it will be interesting to see the in-fighting between the various countries that make up the EU. TATES EMBRACE FAIRTRADE Tate and Lyle has announced its intention to switch all its retail sugar to ‘fair-trade’. The roll-out will start almost immediately with the refining of 70 000 tons of raws originating from Tower Hill in Belize. For the sugar to be fair-trade accredited, the producers must be paid a minimum price to cover the cost of sustainable production plus an extra premium to be invested community development projects. As the sugar will be part of the ACP quota and hence priced well above the world price one has to ask what ACP sugar is not ‘fair-trade’? HOMS REFINERY OPERATIONAL Cargill’s Syrian refinery at Homs, about 90 km inland from the port of Tartus, has started up. The refinery, a joint venture with Brazil’s Crystalsev and a local trader, apparently only has a capacity of 1 000 t/d when melting Brazilian [presumably VHP or VVHP] raws. It was originally reported to be a 1 million t/annum plant so the 1 000 t/d may be its current throughput as it ramps up to a full capacity of 3 000 t/d. There is on-site storage for 270 000 tons of raws and 80 000 tons of whites so the Cargill traders must be pleased. INDIA ENDS FREIGHT SUBSIDIES Following the protests from Australia, Brazil and Thailand reported here previously, India has announced that it will no longer offer its controversial export freight subsidies after September this year. VIETNAM In a strangely veiled announcement, Vietnam has announced that a ‘US based sugar corporation’ wants to buy one of Vietnam’s small sugar factories. The factory, at Que Son, hasn’t operated for two years and is burdened with debt. What is stranger is that the purchaser is reported to have previously invested in Thailand, Malaysia and the Philippines. CHINA HIT BY FREEZE The cold February weather that disrupted the Chinese New Year also hit the cane in Guangxi province where 5 million of the country’s 14 million tons of sugar originates. The current estimate is that 72% of the crop was damaged but no estimate of the impact on sugar production has been released. MACKAY FLOODS Queensland’s Mackay district was also hit by floods last month with about 1 000 mm of rain falling in a week. The Mackay sugar cooperative estimates the cost of the damage to be in excess of Aus$1 million with substantial damage to the cane haulage infrastructure. MARROMEU ESCAPES AGAIN The Moçambiquan floods that we reported last month continued to climb during February but the Sena sugar estate a Marromeu again avoided being flooded, thanks to its dykes. The water level peaked 7.36 metres but the dykes are designed to hold out up to 8 metres. NAKAMBALA EXPANSION It seems that the project to double capacity at Illovo’s Zambian operation is running late. The company is blaming cement shortages and power outages [nothing new there then] together with mid-summer floods [the estate is on the Kafue which is part of the Zambezi river system also affecting Moçambique]. ZIMBABWE Zimbabwe only produced 349 000 tons in 2007 [Hippo was down to 156 000 tons] but that it produced any sugar in the circumstances is a tribute to the management and workers there. Tongaat Hulett is still saying it wants to invest in its low veldt operations [Triangle and Hippo Valley] in order to increase capacity to 600 000 t/annum. Perhaps it knows something about the results of this month’s presidential elections which we don’t know? Let us hope so. MEXICO ETHANOL Mexico’s Grupo Santos has ambition : it wants to see a $12 billion project to establish 60 ethanol from cane plants, each producing about 500 000 litres per day. More modestly it is suggesting that it would invest in the first of these… There seem to be a couple of problems : land reforms limit ownership under sugarcane to about 900 ha [and Santos estimates that each plant would need 80 times that amount] and ethanol blending is not mandated in Mexico. ST JOHN REFINERY We hear that Jack Thompson is the manager but no, this is not in New Brunswick Canada, this is St John [the Baptist] Parish Louisiana and the long discussed Cargill refinery on the Mississippi. The new state legislature has finally approved the project and it looks as if it will get approval for $100 million of ‘Gulf Opportunity Zone’ bonds. The bonds are part of the Federal Government’s attempt to help the region recover from hurricanes Katrina and Rita and are tax-exempt, low-interest units. The concept is for the refinery to be a repeat of the Homs plant which means that it will refine, at worst, VHP raws. How the local cane producers who are Cargill’s partners in the refinery will produce such a quality of raws is anybody’s guess. CHINA BUYS INTO AFRICA A leather making company from south China has announced that it is buying sugar estates in Benin, Madagascar and Sierra Leone from a company called ‘Complant International Sugar Industry’. The selling price is $164 million and the seller is, apparently, guaranteeing profits from the three of $216 million over this year and next. Why don’t people offer us 1.3 year paybacks on our investments? On the other hand, if you had that profit level would you sell? 
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