TONGAAT Hulett Hippo Valley Estates Ltd has said Star Africa’s failure to restore its sugar refining capacity has affected sugar-milling companies like itselfwho have also had to operate at reduced capacity.
Report by Our Staff Writer
Star Africa is the sole sugar refinery in the country where raw brown sugar is refined into white sugar and other sugars used in the confectionery industry.
At Tongaat Hulett Hippo Valley Estates’ annual general meeting on Wednesday, CEO Sydney Mtsambiwa said capacity at the group’s mill was weighed down by bottlenecks at Star Africa, and his company had resorted to pushing through its own brand of brown sugar locally and some volumes for exports.
Hippo financial director John Chibwe hoped management changes at Star Africa would see that company utilising the 230 000 tonnes capacity it had at its refineries in Harare and Bulawayo.
Mtsambiwa said the domestic market for sugar was buoyant and the market had taken well to its in-house brand of brown sugar.
He said brown sugar made up 80% of the group’s volumes. The group said domestic demand for sugar was expected to remain firm in the foreseeable future and the export markets such as the European Union and the United States were expected to remain attractive in the year ahead.
The domestic market made up 60% of Hippo’s total volumes, while exports made up the remainder.
The group said premium prices were obtaining in the EU owing to droughts in other major sugar-producing countries.
Chibwe indicated Hippo had achieved very high prices internationally, upwards of US$1 000 per tonne at some point. To achieve these numbers, Chibwe said they had leveraged on international exposure from Tongaat Hulett.
In terms of local pricing, Mtsambiwa said the price had been very favourable, with the average price at around US$600/tonne.
Chibwe said outgrowers’ yield per hectare had significantly improved, although he did not give figures, adding he was happy with the current trend.
Although Chibwe could not be drawn to give figures, he indicated that exports into the EU were expected to be at last year’s level of 125 000 tonnes, at very favourable prices, if not better. The group said it had a long term contract to supply 50 000 tonnes to the EU but the rest of the volume had to be pushed through tendering.
Mtsambiwa said the mills were now in good condition after the refurbishment last year. He said 4% of cane throughput would go to molasses.
Mtsambiwa also said the group was in the process of replanting 16 000 hectares. To date, 7 000 hectares had been replanted (in one and a half seasons) while 3 000 hectares more would be planted before the end of the season and the balance next year.
A total US$30 million had been set aside for the project using the PTA facility and to date US$14 million had been used for the project, which was spread over a four-year period.
The group said it was in talks with the indigenisation ministry over its compliance.