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May 2006

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April was a ‘more of the same’ month really.


Greencore, the mother company of Irish Sugar, has stated that it expects to get €100 million [$120 million] of the €146 million compensation fund reserved for the industrial side of the sugar industry in shutting down. The remaining €146 million is presumably for the farming side. It also expects t get another €100 million for its land at Carlow, the site of one of the two factories that it used to operate.


The EU has a €40 million [$48 million] fund set aside to help ACP countries overcome difficulties caused by its reform of the sugar regime. So far Guyana has asked for €500 million and now other countries are coming forward :

  • Tanzania has announced the results of its strategic review of the country’s sugar industry and that it needs €240 million [$288 million] over the next seven years. [The EU has indicated that it may get €12 million];
  • Barbados, perhaps more wisely, has announced its commitment to an integrated sugar/ethanol/co-generation model [it has been working on high fibre cane for some time] without stating how much support it will need;
  • Mauritius has also announced a review of its industry. Its intention is to reduce the number of factories to just four – Savannah, Médine, Flacq United and Bellevue – which means the closure of seven. It estimates that it will require $800 million to complete the change and thinks it might get one quarter of that from the EU;

What is clear is that the ACP countries are asking for [demanding?] much more than is on the table so there will be much bitterness between them as the cake is carved up.


The world price has continued to hover in the 17 to 18 ˘/lb range but ISO sounded a warning note last month, suggesting a significant reduction in the shortfall [it seems that everyone thinks in derivatives these days] in 2006/7 forecast and perhaps even a slight reduction in the expected shortfall for the current year.


It seems that the bidding for a controlling interest in Illovo Sugar is down to a one horse race but doesn’t mean that the race is won. Tereos, the French group offering mainly an asset swap, has pulled out to leave British Sugar’s owner to keep talking. In the meantime the company has announced a 30% increase in earnings per share thanks to the current world price so the bid price may no longer be sufficient to secure a deal.


TSB [Transvaal Suiker Beperk] has confirmed its uprated capacities following ZAR130 million [$20 million] worth of work. Apparently Malelane and Komati now form the Nkomazi division of the company and each have a capacity of 320 000 t/a of sugar. Most of the cost seems to have related to installing a new boiler at Komati.

The company was also in the news with respect to its broader international expansion plans – without saying anything substantial other than declaring is well known desire to expand – and its apparent lack of commitment to Black Empowerment within South Africa.


Last month, as the successful commissioning of Lacassine was finally announced [don’t even think about the juice purity in April] the proposed sister project at Bunkie seems to have been given some form of go-ahead, albeit in the private sector. As regular readers will know, the Bunkie project saw a major rift within the state government over state funding for the project. Now, all that the state has done is approve the issue of a private sector bond without the state guarantee that supports the Lacassine bond.


As part of its 2004 Aus 440 million aid package to the sugar industry, the Federal Government has granted Aus$ 36 million [US$ 27], mainly for two diversification projects : a fertiliser production plant at Bundaberg’s Tableland factory and a furfural plant at Proserpine [who have long been talking to South Africans about that technology].

The announcement was made to coincide with a report by a government sponsored industry oversight group which wants the industry to move towards the ‘Brazil’ model with ethanol as part of the mix. It warned that the country could not be complacent in the light of the current high world price.


Sugar Australia, the CSR/Mackay joint venture, has announced a Aus$ 100 million [US$ 76 million] refurbishment of its Yarraville refinery in Melbourne. As parts of the site include listed heritage buildings [going back to the mid-Victorian period] the project is going to be challenging and costly and as production is only ~300,000 tRSO/a, that makes a large financial burden.


The situation with respect to refining in Syria is still as clear as mud. It now looks as if the on and off Cargill refinery is now ‘on’ again, at least according to the main local partner. That partner is variously the National Sugar or Syrian Sugar Refinery Company [which may or may not be government owned but probably isn’t] and it says that it will build a refinery at Jandar, just 30 km south of Homs where the Akhras group intends to build its refinery [see last month’s news].

This refinery is reported to be designed to produce 1 million tRSO/a with the potential to double that to “meet growing regional demand”. One report also said that construction would start “next week”.


Another Cargill joint venture refinery was also in the news last month, but this time with Cargill accepting part of the limelight. The refinery will be near Kakinada in Andhra Pradesh and the main JV partner is EID Parry. No capacity has been reported but the cost estimate is said to be $72 million.


Kenya seems to have decided to wipe out the debt of its public sector sugar companies [only Mumias, the largest, is in the private sector], perhaps as a start towards privaisation.

It is not clear what the shareholders of Mumias will say about that though. The company itself has, in the meantime, announced its long-term expansion objectives. It wants to go from the present 285 000 tons annual production to 410 000 and to increase its electricity export tenfold to 20 MW.


The government in Zimbabwe thinks that it is about to put right the sugar industry by using a parliamentary portfolio committee to investigate what is happening in the Lowveldt. At least it recognises that there is a problem. However, another news item on more or less the same day reported that ‘farmers’ given white owned land to grow cane were only achieving 10 t/ha so were getting official support to requisition land still owned by white farmers and with standing cane [crop has just started]!


Taisuco has announced plans to privatise seven of its eight divisions, many of which are diversifications well away from the company origins [it owns a hypermarket chain and has a petroleum products division for example]. As the announcement also stated that “sugar is a daily necessity and a strategic commodity that cannot be privatised” there are no prizes for nominating the division to remain.


An Australian start-up company, a commercial offshoot of research at the Queensland University of Technology, made a splash last month with its [patented] “In-Plant Activation technology” and talking about gene activation. No mention of how the desired gene gets in the plant so not genetic modification then?

The first application is targeted at using cellulase in sugar cane to reduce bagasse fibre to sugars for ethanol production. One has to question what fuel is to be used to run the site if the bagasse is diverted to ethanol though, particularly as a distillery unfavourably changes the energy balance of a sugar factory.

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