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September 2007

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Its hurricane season again : hold on to your hats ...


Luckily, Hurricane Dean was not at full strength and was offshore to the south as it passed Jamaica. Apparently only 200 000 tons of cane were damaged although that was an early estimate :

Dean might not have been so kind to Belize or its sugarcane : it was at full strength as it came ashore more or less at the Belize/Mexico border near Chetumal. However the extent of the damage is not clear with the growers claiming up to 80% loss but a BSI spokesman stating that they didn’t expect more than a 10% loss of crop. What we haven’t heard is how the sugar estates in south eastern Mexico faired [after all, you can more or less see Tower Hill from Ingenio San Miguel for instance].


We understand that a Columbian group has purchased the St James sugar factory in Louisiana – with a view to running it as a sugarcane to ethanol plant. Such a move would go against the trend of consolidation but the real issue will be the disposal of the stillage : how will that be achieved?


A paper presented at the recent 234th national meeting of the American Chemical Society warns that HFCS may increase the risk of diabetes, particularly in children. The paper stemmed from research at a US university which found that HFCS increased the levels of harmful carbonyl compounds in drinks. carbonyl compounds are implicated in causing some of the complications common to diabetes.


Brazil has marginally lowered its forecast for crystal sugar production, expecting more ethanol to be produced. The new figure –still 30 million tons – is even slightly down on last year although sugarcane production is expected to be 72 million tons more than last year at 547 million tons.


2008 will see the long awaited free access to the USA for Mexican sugar but the latest Farm Bill contains a new provision to protect the domestic sugar industry. Under the proposed arrangement the USDA will buy up any displaced sugar and sell it at a discount to ethanol producers who would otherwise use corn to produce the ethanol. That will displace corn which will in turn be used to make HFCS which will go to Mexico to displace more Mexican sugar which will go to the USA to displace more US sugar which will …..


Odebrecht, a leading Brazilian based international contractor, has stated its intention of becoming a major producer of ethanol and sugar equal to Cosan, the country’s leading producer. It intends to invest 5 billion reais [ about US$ 2.6 billion] in ten plants ‘in less than a decade’ to give it a crushing capacity of 40 to 45 million tons of cane per annum.


Iran has announced the establishment of a 1 million ton/annum sugar refinery in Bandar-e Khomeini at the far northern end of the Persian Gulf. The project budget is apparently US$ 190 million.


A more or less unknown company is said to be about to spend US$ 510 million setting up a ‘Brazilian model’ sugarcane enterprise in the southern province of Gaza, Moçambique [just north of Maputo province where Illovo has its Maragra mill and west of Inhambane province where Tongaat has its Xinavane mill]. What is strange is that the company, ‘Pro-Cana’, has never been heard of before. It is described as a private company with British interests that apparently also owns an ethanol plant in Brazil.


It looks as if the Pakistan Sugar Millers Association has won its battle to avoid sugar imports from India. As we reported back in May, the PSMA has been questioning the quality of Indian sugar in order to stop the Pakistani government from importing sugar from there to make up a local shortfall. The government has now announced that it will not import any sugar because a record crop is forecast for the next year, starting November 1st. That assumes that the mills start crushing on time of course but with the threat of imports maybe they will.


Indonesia has expanded on its plans for its sugar industry, stating that five companies will each build a factory over the next two years in order to increase local white sugar production by 40% to 3.3 million tons. The combined crush rate of the five will be about 26 000 tcd. Interestingly, the first two companies to be named will both develop their factories on Sulawesi even though conditions there are less than ideal for cane production.


British Sugar has long had interests in the cane industry of southern China but recently it announced a major investment in the beet sector of northern China. Its partner is Hebei Tian Lu, a beet sugar producer which produced 145 000 tons of sugar last year from four separate factories. The new company, to be called Bo Tian, will receive about US$ 140 million from British Sugar in exchange for 51% of the of the shares. It is unclear what Hebei Tian Lu is contributing but presumably the four existing factories have been valued at slightly less than $ 140 million.


Tate and Lyle has taken the first step to secure its raw sugar supply for Thames Refinery : a 10% stake in Mitr Phol’s Laotian project. The new factory, budgeted at $115 million, will be located in the west of the country not that far from Mitr Phol’s Kalasin factory. It will initially crush 5 000 tcd but the plan is to increase that to 10 000 tcd. The length of crop is not given but it is not likely to deliver even 10% of the raws required for Thames. The raws will come into the EU duty free under the EBA protocol because Laos is an LDC.


There is no smoke without fire : although some press comments have denied earlier reports, it seems that the EU is threatening to withhold support for Fiji and its sugar regime unless it returns to democracy by 2009. The country stands to benefit from hand-outs approved as part of the changes to the EU’s sugar regime – provided that it complies.


Following our article in April about a sugar powered battery, Sony have announced a 50 mW test cell – enough to power a Walkman. The announcement explains some of the challenges faced in designing the enzyme catalysed system and implies that there will be more developments to come. No date was given for commercial production.

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