Durban - Generating electricity and producing biofuels would make the sugar industry more sustainable, promote growth in the sector and create jobs, Tongaat Hulett's chief executive, Peter Staude, said yesterday.
He said that the company could ultimately generate as much as 1 150 megawatts but it would need to invest in technology to achieve the target.
Staude said it would be more helpful if production of biofuels, for which there is a 2 percent target during a trial period until 2013, was mandatory.
The current price of 12c a kilowatt-hour it received for the 5MW it supplied to the national grid was not adequate for it to invest in new technology.
Staude did not disclose what an appropriate price would be and what the company could spend in new technology to generate electricity.
Nevertheless Eskom, which has called for bids from industry to generate electricity, was aware that the price it pays for power needed to reflect the cost of investment.
It was previously reported that the sugar industry would want 40c a kWh as it would cost between R300 million and R400 million to upgrade a mill.
Staude said there were lots of steps to be taken to achieve full-scale generation. The group's initial target was to generate electricity at its Felixton Mill using bagasse, a fibrous by-product of sugar cane processing. After that it would also use cane tops and trash, the debris which is left in the field after harvesting.
If all of Tongaat's sugar mills in the region were running at full capacity, and two-thirds of the cane tops and trash were used, the group could generate 660MW during the growing season, which runs from March to December, said Staude.
This would save 2 million tons of coal and prevent 4.25 million tons of carbon dioxide emissions. However, Tongaat could generate a further 490MW if it used coal for the balance of the year.
Yesterday Tongaat reported a 15 percent rise in profit from continuing operations to R838 million for the year to December as a strong performance in the property division was dampened by its sugar operations.
The property business, Tongaat Hulett Developments, reported a 32 percent rise in operating profit to R428 million and a capital profit of R48 million.
The sugar business reported a R360 million profit from R356 million the year before with total sugar production at 1.119 million tons, up from 1.067 million tons previously but short on the forecast 1.327 million tons.
Staude said 2007 had been a challenging year as sugar production fell short of milling capacity across the region.
The Zimbabwean operations were affected by hyperinflation while price controls resulted in sugar prices being lower compared to the region. The Triangle operation in Zimbabwe in 2002 produced 580 000 tons but last year produced only 193 000 tons, down from 240 000 tons in 2006.
Including the 156 000 tons from Hippo Valley, in which Tongaat bought a 50.4 percent interest at the end of 2006, production in Zimbabwe was 349 000 tons.
The expansion of its Mozambique operations was going well but had interfered with existing operations.
Tongaat Hullet shares yesterday shed 0.88 percent to R78.55. The food producers sector slipped 0.24 percent.