December 2011 Welcome to our news page! We try to bring you the latest news and comment on this page but it will always be a better place if you send us your news. You can write to us by clicking on the Contact link at the left. A strong Australian focus - only Mackay Sugar left to go : WORLD PRICE The world price sagged through much of November, reaching a trough of about 23 US¢/lb before recovering to about 24 at the end of the month. It is not yet clear where it is heading. EU Not only are non-members not happy with the proposed end to the EU sugar regime, there have been internal protests too with Austria, France, Hungary, Lithuania, Romania and Slovakia all asking for an extension to at least 2020. In the meantime the Commission announced that it was allowing more exports in the current year, all the way up to the WTO limit, but what riled Brazil and Australia was that it announced that Europe would also be exporting physical sugar this year which had actually been authorised last year when there was no physical to export. The Agricultural Commissioner used the opportunity to say how senseless the regime was and the sooner it was ended the better. HELLENIC SUGAR Hellenic Sugar, a company owned by the Agricultural Bank of Greece has been up for sale for some time with various buyers mentioned but with the risk of paying in Euros for a company which might soon be valued in New Drachmas and which might better be shut down [without grants from the EU for doing so], the buyers seem to be walking away. If it is sold it is likely to be to another Greek company. UKRAINE We reported in August that the Ukraine wanted too return to its historical highs of sugar production, aiming for 60 to 65 million tons of beet and hence 10 million tons of sugar by 2016. By the end of November, the National Association of Sugar Manufacturers was reporting a 43% year on year increase in sugar production to 2.1 million tons for the 16 million tons of beets that were sliced with a total beet harvest of nearly 20 million tons forecast by the time the campaign finishes. A good start to the 5 year plan. INDIA All the signs are there for another downturn in the size of the Indian crop. Although the current season will be good, it is only because the farmers are chasing unrealistic cane prices. At the start of November UP had not announced its minimum price but the farmers were demanding that it increase from last season’s INR 205 per quintal [already ~US$35 per ton] to 275 per quintal or $55 per ton. Later in the month, the politicians started talking about INR 240 per quintal – there is an election coming up after all. SRI LANKA The government of Sri lanka is in dangerous waters : it has passed a new law called Underperforming Enterprises and Underutilized Assets which allows it to take over any company which it considers to be underperforming. It immediately nominated both Pelwatte and Sevanagala, the only two operating sugar factories in the country, for take-over. The move has caused a storm of protest from all parties involved in the sector. THAILAND Last moth we reported that Thailand was expected to start crushing late due to the severe floods experienced there but at the end of November F.O. Licht were reporting that crushing had started in mid November, perhaps two weeks earlier than usual. Production of over 10 million tons is forecast for this crop, up from last year’s record 9.6 million. MITR PHOL Mitr Phol is not only acquisitive [see below], it is also expansive having announced a major capital programme for its bagasse firing power division. It plans to spend Bt 4.2 billion next year in order to increase its capacity by 11 MW. Part of the financing for the expansion will come from selling 100 000 tons of carbon credits a year to Thai Airways. VIETNAM A Vietnamese company called Hoang Anh Gia Lai with headquarters in the central city of Pleiku, has announced that it is to build a 7 000 tcd factory with co-located ethanol plant and export electricity station. It says that it has a budget of $100 million. TARLAC The Tarlac factory 100 km north of Manila has had a chequered history in the last decade or so with rioters killed and so on. The country’s Supreme Court has now found that the 6 400 ha core estate, called Hacienda Luisita, is illegally held and 5 000 ha must be handed over to small scale farmers under the Agrarian Reform laws. PROSERPINE The month started with the company being placed in voluntary administration, at which point Cofco – the Chinese company – increased its offer through its Tully mill by Aus$2 million to 122 million ‘following completion of an engineering evaluation’. By the middle of the month it was announced that Sucrogen, Cofco’s rival in the bidding war, had agreed to buy the company for a headline price of Aus$120 million plus a doubling of its $15 million which is already in place. The next move came from Cofco which put up its offer to Aus$125 million and then increased that by a further 3 million to 128 million. However, by that time it was understood that the Administrator had entered into a binding contract with Sucrogen so was another bid or any value? Watch this space. MARYBOROUGH Thailand’s Mitr Phol has made a bid for the remaining 78% of MSF which it doesn’t own at Aus$4.45 per share, some 30% above the market price just before the offer is made and 37% above the average for the previous quarter. The price is seen to be very high in the hope of stopping Cofco from putting in a rival bid. At the end of the month that strategy seemed to be working. As regular readers will know, MSF operates four factories with a total crushing capacity of 4.7 million tons of cane a year, producing about 550,000 tons of sugar. FIJI Tate and Lyle seems to be taking over from the Indians as the main technical support for FSC with the company telling the Prime Minister that it will continue with the support already provided. The only difference is that T&L are probably not charging FSC for the services. In the meantime, the Government has cut its support budget for the company from last year’s $110 million to only $40 million. Mind you, T&L are desperate : we hear that this year’s melt at Thames refinery will be below 800 000 tons and might be as low as 600 000. The nominal capacity of the refinery is about 1.1 million tons. No wonder the company paid the new Chinese owners of JSC so much for its sugar. AMERICAN CRYSTAL The union workers’ lock-out at American Crystal is still on after four months despite the urgings from members of Congress to reach a settlement. The workers voted to turn down a second revised contract at the beginning of November. The flames of the fire were fanned much more strongly when the company announced record profits for 2010 with farmer shareholders getting over $70 per ton of beets and the senior management getting good bonuses of course. Not that the union workers are badly underpaid : the average package is reported to be worth $75,000 per annum and the offer which was on the table was for a 17% increase over five years – whether or not the campaign is good. Towards the end of November the company started advertising for temporary replacements for the vacant posts [as distinct from the contract temporary workers taken on during the lock-out]. It is prohibited from recruiting permanent replacements under federal law. CUBA It looks as if Cuba is rationalising again with talk of only 46 factories crushing this year. The aim of Azcuba [the replacement for the Ministry of Sugar] is to reduce administrative costs by 55%, no mean feat if they achieve even half of that. SCJ It is time to get used to a new name for the Sugar Company of Jamaica now that the Chinese company Complant has purchased it : Pan Caribbean Sugar Company. Complant seem to be focusing on Moneymusk where they are proposing to build a new, presumably Chinese designed and built, factory with co-located refinery. Factory labour costs will reportedly reduce dramatically but the workers will be deployed to re-developed agricultural operations. Hopefully they will have more success than Guysuco at Skeldon II. SHREE RENUKA Renuka, from India, is blaming Brazil for its current poor performance : it has only crushed 8.3 million tons there compared to the 10 million budget. It is clear from comments made by the MD that, like most Brazilian operations, it suffered this year from a lack of re-planting in earlier years and is having to scramble to recover the vigour of its overall crop. In India, of course, it just buys cane rather than growing it. TANZANIA A Dubai based company says that it is going to invest $500 million in the far west of Tanzania [just south of Burundi], some of which will establish a 20 000 tcd sugar factory. The government of the country is reportedly giving it 100 000 ha of land for the project. However, the company is also supposed to be building a 150 to 200 MW power plant and a 300 000 t/a copper smelter with associated mine with the same $500 million : that is serious gearing – or a pipedream. ZAMBIA Not that far [± 550 km] from the proposed development in western Tanzania, the government of Zambia is looking for an investor to develop a large sugar estate in the far north west [Zambia more or less has two western borders]. It is offering a 10 000 ha core estate which will be close to 38 000 ha of large farms plus many smaller units. SOUTH AFRICA The South African industry is switching to NIR analysis for its cane payment system from the 2012 crop. In addition to being used for cane analysis there are plans afoot to use the analysers for other factory liquor streams. 
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