Sugar Technology
On-line News

August 2010

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An interesting month, what with 2 stop-press items :


WORLD PRICE

The news wires were all over the place with predictions about which way the world price would go – and why. In the event the price seems to have bounced back quite a bit, as can be seen below :

World Price

TATE AND LYLE SELLS OUT OF SUGAR

As you will know from the stop press last month, T&L has sold almost all of its remaining sugar business to ASR, the company which grew out of Tate’s North American refining business, Amstar/Domino, that it sold to the Fanjuls. The sale included the trade names so it would not be a surprise to find the residual group re-branded as some meaningless ‘inspiring’ name ….

WILMAR BUYS SUCROGEN

The second stop-press item from last month : Wilmar International, a palm oil group from Malaysia, snatched CSR’s sugar division from China’s Bright Food. It is interesting to compare the price to earnings ratio with that of the Tate & Lyle deal : Wilmar a high 9.8 times earnings [before interest, tax, depreciation and amortisation] but ASR paid a staggering 14 times earnings on the same basis.

The CSR AGM followed soon after the announcement and the company told shareholders that it expected to pay them some of the sale proceeds.

MARYBOROUGH AND BUNDABERG

Maryborough and Bundaberg have reached a final agreement on their marriage [the announcement of which you will have read here a few months ago] with Maryborough having an option to buy the rest of Bundaberg’s interest at a later date. The new entity will start trading from December 1.

No sooner was the announcement made than Maryborough announced that it was looking for additional equity participants …

SAVANNAH SETTLEMENT

Imperial Sugar has accepted a total of about $4 million in penalties for safety infringements that led to the fatal explosion nearly 30 months ago but has done so without any acknowledgement of wrongdoing. In addition it has accepted another $2 million for infringements at Gramercy. As part of the deal OSHA has been granted ‘intensive oversight’ of the operations at Savannah.

JAMAICAN PRIVATISATION A REALITY?

We thought it was going to happen 2 years ago but the Brazilian deal fell through; now everything hinges on a company called Complant from China. Complant has tendered US$ 9 million for Frome, Monymusk and Bernard Lodge and has agreed to pay US$35 per ha per year for 50 years for about 18 000 ha of cane land. There is, apparently, even a 25 year extension available for the land lease but one doubts if the investor will last that long somehow.

Meanwhile, the new owners of Long Pond, one of the smaller factories sold off last year, have announced that they will not crush next season as extensive work is required on the boilers. [As even Frome, the ‘jewel’ in the crown, still has mainly WIF boilers from many decades ago it is impossible to imagine the state of the Long Pond units.] It has emerged that Long Pond only crushed a little under 35 000 tons of cane, producing a mere 1 400 tons of sugar.

PERU TO [FINALLY] RE-PRIVATISE?

The government of Peru has announced plans to divest itself of the sugar industry, more or less 40 years after the controversial agrarian reform policy more or less destroyed the industry by handing it to the workers. Six companies are involved, all well known names : Andahuasi, Tuman, Paramonga, Laredo, Pomalca and Chucarapi.

THE SUDAN

The Sudanese state sugar industry is going to refurbish and expand its four factories in order to increase capacity to 500 000 t/a output. It says that it is also planning three new factories with a total capacity of another 375 000 tons and claims to be close to starting the first one in central Sennar. That will produce 125 000 tons a year and, with $260 million of Chinese finance, will presumably be built by a Chinese contractor.

Kenana is claiming that its White Nile project will be crushing in November 2011 so it must feel confident that it has solved the liquidity problems which have plagued the $1.1 billion project. As we reported last month it had to cancel its order on FCB for the process house and instead buy from India. The cane has been available for several years but full scale agriculture had to be delayed pending construction of the factory.

Meanwhile Kenana and the state industry have both had to purchase sugar on the world market as demand continues to out-strip local supply.

MAURITIUS

Ten years ago Mauritius was exporting up to 650 000 t/a of raws to Europe under the ACP convention. Last year the island only produced about 467 000 tons but, of its exports, 78 000 were refined. This year it expects production to drop to 450 000 tons but refined exports are likely to be 320 000 tons as the recent white end additions come into full production. The economics of shipping refined should be interesting : will Man use a BiBo?

REFORMS AFOOT IN INDIA?

There is talk in India of a new pricing structure based on some form of tolling arrangement to replace the current straight purchase arrangement. There is mention of the farmers getting 66% of the revenue but not just from the sugar but also from any ethanol, export cogeneration or molasses project.

The country needs to be careful to strike the right balance though because we have seen so many co-products projects stalled elsewhere because the miller has to put up all of the equity but the farmer gets benefit.

NEW THAI FACTORY

The man behind Thai Beverage [which owns Chang beer and Mekhong Whisky] is establishing a 36 000 tcd cane factory in the central north of Thailand with a 72 MW electrical export station. It will initially crush 18 000 tcd so there are presumably 2 extraction lines. The first phase is scheduled to crush in the 2011/12 crop.





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