Harare - The Zimbabwe-listed unit of South African agro-processor, Tongaat Hulett, is facing difficult operating conditions in Zimbabwe, and has set its eyes on the African export market. However, the government has moved in to stop sugar imports by cancelling licences for importers.
Tongaat Hulett has a controlling stake in Zimbabwe Stock Exchange listed Hippo Valley, as well as in non-listed Triangle Sugar Corporation.
The Zimbabwe sugar industry has earmarked the 2018/19 season to attain maximum installed capacity of 640 000 tons per year, with industry experts and players projecting industry output of 506 000 tons for this year.
Sydney Mutsambiwa, the chief executive of Hippo Valley, told Business Report in an interview after the company’s annual general meeting (AGM) in Harare on Tuesday that the company was seeking a greater share of the African export market. The EU export market is uncertain, owing to threats over import quotas.
“Our view is that we continue to export to those markets where we have specific advantages, particularly within the African sub-region. We continue to try and penetrate these export markets as fast as we can; we are competing against everybody else, so it is not as though these are given opportunities,” he said.
Protection
He added that prospects for the export market would be determined by developments in the Zimbabwean greater export sector as well as developments in the regional markets.
However, with most African countries pushing for protection of local producers, the company could run into difficulties.
Tough operating conditions in the Zimbabwean market have not eased constraints for Hippo Valley. Zimbabwe, and other southern African countries, are facing growing adverse weather conditions and imports. However, Mutsambiwa said the government had given assurances that import licences for sugar were no longer being issued.
South Africa and Zimbabwe are battling rising sugar imports, which executives say are disrupting local market demand trends.
“We hope that the trading environment will continue to support the growth of the sugar industry. The export market is determined by what is happening on the export front,” Mutsambiwa said.
The dry weather conditions, which have seen water levels in most of Hippo Valley’s supply dams dwindle, are expected to hit the company’s production levels.
BUSINESS REPORT