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May was a month of confirmations - not all of them good news. The sugar price is not good either, it is down below 7 USą per lb again.
When Man Sugar demerged from the rest of Man it did not take with it the stake that Man held in Sugar Australia, a sugar refining company formed by CSR [50%], Mackay [25%] and Man [25%]. Man is now trying to sell its stake, reportedly to Mackay but Mackay have formally stated that it is not interested.
Sugar Australia is the country's biggest refiner in Australia. It produced more than 680,000 metric tons of refined sugar in 2002 from two refineries, one in Melbourne and the other in Mackay.
Also, as we predicted last month, Mackay sugar has announced that it will not be operating its Pleystowe mill again this year as the drought continues to impact on the crop. This time there is no mention of running it as a syrup mill [as was done last year].
CUBAN CROP DISASTROUS
Last month we reported that all was not well with the crop in Cuba, writing :"Some estimates are as low as 2 million tons and the consensus view seems to be around 2.5 million." With the crop virtually over with the arrival of the rains, it now looks as if the lower figure was about right. That means that the island will either have to default on its international contracts or import over half a million tons to meet domestic demand.
BALKANS SMUGGLING CONTINUES
Smuggling of non-local sugar has been a problem ever since various Balkan states were granted special access to the high priced EU domestic sugar market. Earlier in the month, the chief of the Serbian Customs Bureau was apparently sacked for naming a company which he claimed was responsible. Then the EU restored the concession which had been suspended because of the smuggling. However, that move was followed at the month end by a statement from the EU's fraud office saying it was investigating the situation. The statement included this pithy comment: "Croatia is not known to be a country in which sugar cane is grown."
It looks as if Nzoia factory did not operate at all in May. The month saw the factory manager replaced by a senior FCSchaffer director and the problems with the growers apparently resolved [well sufficiently resolved to get operations started again] but then the factory could not restart after a major crack was discovered in a boiler stack.
Meanwhile things are not much better at Mumias where the company is forecasting a loss of over US$3 million for the year, compared to a profit of about $1.5 million for the previous year. The Government has also announced that it "will ensure" that the [not long privatised] company does not renew the Booker Tate management contract which is due to expire in the next month or so.
KINYARA ROUND 2
The Government of Uganda has declared that under the latest privatisation plans for Kinyara, Booker Tate will not be sold any shares. Instead 51% will go to a private sector core investor, 10% each will go to employees and growers and the remainder will be floated on the local stock exchange. There has been no comment from BT but they may be relieved not to have to invest - except that they may lose their management contract.
CHISUMBANJE COMES ROUND AGAIN
A new sugar estate at Chisumbanje in Zimbabwe has been talked about for at least 20 years but has never happened. The country's Industrial Development Corporation has now announced that it will invest US$120 million in the project. Not bad for a bankrupt country which cannot even feed its own people and where the sugar refinery has had to stop production due to a lack of railway wagons to deliver the country's abundant supply of coal.
Bruce Dunlop has been replaced by Martin Mohale as the Managing Director of TH Sugar under the company's empowerment strategy. The South African government has identified the TH group as a leader in terms of employment equity with over 40% of the group's managers now black people. Don't think that this is a demotion for Dunlop though: he is now responsible for regional sugar operations [Mozambique, Swaziland and Zimbabwe as well as South Africa] so he is presumably Mohale's boss.
WALKERS TO GO
Downer EDI, the owner of Walkers of Australia has confirmed that it has agreed to sell the company to Bundaberg Foundry, bringing to an end over 100 years of service to the local and international sugar industries.