Tongaat Hulett sees growth in Zimbabwe, Mozambique sugar operations

South African agro-processing company Tongaat Hulett expects its Zimbabwean and Mozambican sugar businesses, which are in various stages of expansion, to grow their combined operating profit to over R1-million a year over time.

But CEO Peter Staude said that these estimates were dependent on various factors, some of which were out of Tongaat Hullet’s control.

In Zimbabwe, where the company had the capacity to produce 600,000 t/y of sugar, Staude said that increasing this business’s operating profit to R700-million ($99 million) a year would hinge on normalising sugar prices in that country, and Tongaat Hulett’s ability to reach its full production capacity.

Zimbabwe sugar prices were about a third or less than international prices, Staude said. “It needs to come more in line with the world and neighbouring prices.”

Tongaat Hulett was also currently producing almost 30% under its Zimbabwean operations’ nameplate capacity of 600,000 t/y, but Staude reported that the company had put in place measures to increase production. These included the establishment of outgrower cane farmers in the country, and the improvement of the company’s own yields to previous levels.

Staude also unveiled future plans for further increasing Zimbabwean capacity by a further 220,000 t/y to 820,000 t/y. This expansion followed the completion of the Tokwe-Mukorsi dam. This meant that the company would need an additional 17,000 ha under cane, of which 10,000 ha would come from its own cane land and the remainder from local farmers.

Tongaat Hulett was also expecting its Mozambican sugar business, which made an operating profit of R9-million ($1.3 million) in 2006, to contribute more than R350-million($49 million) a year, over time. This would strongly rely on the company executing its current expansion projects “on budget and in time”, Staude said.

Tongaat Hulett was expanding its Xinavene mill’s capacity to 204,000 t/y, and its Mafambisse mill’s capacity to 82,000 t/y. The second phase expansion at Mafambisse would lift production to 116,000 t/y and Staude said the company was planning a third phase expansion project. This would increase Mafambisse’s capacity to 200,000 t/y. The possibility of combining the second and third phases was being considered.

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