Sugar Technology
On-line News

March 2009

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The ongoing Florida story - and others ...


Kingsman changed its forecast for the current year [2008/9] dramatically during February. At the Dubai conference early in the month it was predicting a 9.66 million ton deficit but by the end of the month this had become 11.56 million tons, mainly because it reduced its production forecasts for India [again] and China. In contrast, it expects the following year, which starts this October, to be only 1.6 million tons in deficit.


The proposed deal to purchase US Sugar’s 180 000 acres [73 000 ha] gets more complex by the minute. Florida Crystals, the other major player in the Florida industry, has confirmed that it is in discussions with USSC to buy its assets and with the State to do a land swap if the deal does go through. It also went to court to have the deal declared illegal so is playing on three fronts simultaneously.

The draft contract provides for USSC to carry on farming the land for at least 7 years after the sale but it is now becoming clear that as the land owner the state would want tighter controls on run-off than currently required by legislation. That could be deal breaker.

Finally, now that the 60 day ‘shopping period’ has come to an end [an opportunity for USSC to look for alternative buyers], the company has implemented a ‘poison pill’ arrangement to protect it from a hostile takeover. It is unclear whether it is expecting one or whether it is just being prudent. No doubt there will be more in next month’s news.


The cane farmers strike at Tower Hill, the country’s only sugar factory, which we reported last month continued into February with the farmers demanding removal of the core sampler and the sacking of the Sugar Industry Control Board Chairman. The government refused on both fronts, explaining that EU support for the industry was contingent on reform. However, a couple of days later it backed down and agreed to remove the core sampler [not just stop using it] to get the farmers delivering again. Tower Hill has poor cane, partly because the farmers cut when they feel like it so the industry may be in terminal decline.


One good thing may have come out of the failed attempt to sell SCJ : the government is suggesting that not all of the workforce which was declared redundant in preparation for the sale will be taken back.

The losses of the company currently stand at US$ 47 million for the year [the total to date is heading towards $300 million]. However, you now have another chance : the government has re-advertised the privatisation with a closing date for bids of March 13. Please form an orderly queue.


Brazil’s Centre South region around Sao Paulo has broken the 500 million tons of cane barrier. The crop for the current period is therefore up 16% on the previous year. More of the cane has been processed to bio-ethanol so the production of that is up about 23% to almost 25 million m.


The British Sugar proposals for a refinery operation at its Cantley factory, half way between Norwich and the port of Great Yarmouth, have been approved by the planning authorities. The adaptation of the factory is expected to be complete by May 2010 when the first EBA sugar should arrive.


At one stage last month the proposed sale of Danisco’s sugar division to Nordzucker looked as if it would fall foul of the German competition authority. The result was that Holland’s Suiker Unie purchased Danisco’s Anklam factory in Germany and the purchase price was adjusted downwards accordingly. The deal should now go through.


Thailand’s Eastern Sugar has ‘suspended’ a $67 million export cogeneration project. It cited a fall in power demand resulting from the economic turndown : presumably it couldn’t negotiate the PPA price that it needed.


VMC seems to be in trouble again : it is looking for a ‘white knight’ with $200 million. It has debts of about $120 million and wants to spend $80 million on an upgrade.


The sugarcane lands around Ingham, north of Townsville, have suffered flooding as 800 mm of rain fell in one week at the start of February but the flooding is more widespread than just the one location. By the end of the month the farmers representative was talking about a 20% loss around Ingham and a total cost of Aus$ 100 million – two thirds of which was crop and the other third infrastructure.


A new report has specifically identified Nigeria, Uganda and Angola as countries where substantial bio-fuel industries could be established. In addition to sugarcane and hence bio-ethanol, the report mentions the usual starch crops, palm oil and jatropha. Apparently only slightly over 16% of the potential 245 million hectares of potential land is currently cultivated.


Dangote is planning to increase its refining capacity from 1.4 to 2.4 million tons per year and to develop the raws production at Savannah, the up-country estate that it now owns. How it will achieve the expansion on what is already a congested site in Lagos port remains to be seen.


Just two weeks after starting its demonstration plant in Jennings, Louisiana the British Petroleum / Verenium joint venture has announced a project in Florida which will have 25 times the capacity of the Jennings unit : 136 000 m per year. The plant, expected to cost between US$ 250 to 300 million should be on line in 2011.

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