Sugar Technology
On-line News

December 2006

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A lot of talking up but little real news : perhaps a reflection of the static world price.


The Lacassine syrup factory finally started production in November, one and a half crops late and, reportedly, $11 million over budget. Last month we reported that Colombian investors had purchased the factory : this month we can tell you why. The state has granted them a $60 million loan for 44 years at a fixed 3% interest rate.

At roughly the same time as Lacassine was starting up the $135 million project to build a second factory at Bunkie was turned down by the state’s Bond Commission. That will probably stop any further debate on the issue but, as we have seen in the past, there is still a chance.


Some interesting figures came out of last month’s ISO Annual Conference in London. Thanks to high world prices, Brazil is expected to export 19.3 million tons of sugar and 3 billion litres of ethanol in the current year – but therefore might not meet its domestic ethanol demand. Cane land is up 6% on the year at 6.2 million hectares and the crop is forecast to be 475 million tons.

By 2013 it is expecting to have planted another 3 million hectares of cane land and to have doubled its total ethanol production, annual growth of 7.5% per annum. At that point it will be exporting about 27 million tons of sugar and 6 billion litres of ethanol.


Smut has now been discovered on three farms in the Mackay region and the latest case is 20 kilometers from the first. However, the mill at Isis Central [where the very first Queensland smut was found in June this year] reports that the crop was only down 70 000 tons. It does warn that it expects the situation to get worse however and farmers are being told that they may have to quickly change varieties. It is not that long since they were forced to change after the disaster with the almost monoculture of one variety earlier in the decade.


The state of Maharashtra has started to deregulate its sugar industry. Most Indian states set the price for cane in order to protect the farmers [voters]. Maharashtra has decided to only set the base payment and allow the final payment to be negotiated. It has simultaneously lifted a ban on farmers producing ghur [jaggery]. Meanwhile, across the border in Pakistan the government has decided to start taxing ghur production ….


There was quite a lot about Aliko Dangote’s sugar company in November’s news as he floated the company on the Nigerian stock exchange. He is claiming a capacity of 1.4 million tons/annum for his Lagos refinery, increasing to 2.2 million ‘next year’ but his CEO told the world that it was only running at 75% of capacity.

In order to complete the IPO he had to set out his margins of course – but then, no doubt, his end users almost certainly will not have seen a copy of the prospectus.


Mali has announced a new $150 million sugar project on the Niger River. The estate is expected to produce 100 000 tons of sugar and 60 million litres of ethanol and employ 10 000. Implementation will be by a Chinese contractor.


It looks as if the sugar workers of Mexico are hell-bent on economic suicide again : just like last year, they have been on strike since mid November. This year they want a 15% increase in wages.


This project refuses to lie down : a recent report states that there are 200 ha of beets currently being cultivated and that the quality and yields are up to the expectations of the trial plots of previous years. The growing season is even expected to be shorter than predicted. The project is now firmly aimed at bio-ethanol production rather than sugar but there is no mention of what will happen to the beets from this first 200 ha.


Zambia Sugar, one of the most profitable of Illovo’s operations, is planning to increase capacity by 70% in the next four years at a cost of $154 million. It currently produces about 250 000 tons of sugar each year from about 16 000 ha of land in the Kafue River valley at Nakambala. As Illovo was recently purchased by British Sugar parent ABF, it is no surprise to learn that all of the additional sugar is destined to be exported to Europe through the EBA programme.

Meanwhile, ABF itself reported a 20% drop in earnings for the year ended last September, primarily due to the impact of higher fuel costs [British Sugar processes beet so is fully exposed to fossil fuel prices] and the EU regime changes. It is unclear what, if any, impact the newly acquired stake in Illovo had on the figures, Illovo itself reported a 70% increase in profits so if there was a contribution, the real figures for BS must be worse than indicated by the headline drop.


Some of the newly joined countries in the EU are beginning to understand the power of Brussels : Estonia, Cyprus, Latvia, Slovakia and Malta were all fined last month for stockpiling sugar in advance of their joining. The total charges are €57 million – almost US $80 million.


Mumias recently formed a joint venture with TARDA, the ‘quango’ which is trying to develop a sugar industry down near the coast on the Tana River. However, this has now been blocked by the High Court in Kenya which has ruled that TARDA must stick to its original agreement with a Swiss and Spanish consortium to develop the industry.


Last month we reported the excitement in the local sugar industry caused by the Philippine’s new bio-fuels legislation. This month we have to report anger at a provision – said to be included to protect the sugar supply – which bans sugar producing regions from participating in ethanol production. A case of ‘watch this space’ perhaps?


The Government has extended its closing date for privatisation of JSC, expressing “disappointment” with the offers received. It confirmed that offers had been received from local and international investors [J Wray and Nephew, owners of Appleton, had said they were tendering] but gave no further details. One wonders how much the investors want to take the company away.


It might be a small start but who knows where it will lead? Jones Soda, a bottler from Seattle, is switching its sweetener from HFCS to ‘pure cane sugar’ in a move at least partly motivated by public sentiment against HFCS. What you might not want to know is that among Jone’s fizzy drinks is one with a ‘turkey and gravy’ flavour.


Tate & Lyle, which first started work on bio-plastics in the mid 1970’s [the era when Sucralose was developed], has finally seen its first bio-plastic enter commercial production. Unfortunately for us on the sucrose side, the product – propanediol – is being made by a DuPont – T&L joint venture from corn starch.


We are sorry to hear of the recent death of Geoff Walsh. Geoff, the original owner of Durban based Techserve, was one of the real characters of the sugar industry and was well known by many around the world.

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