Tongaat Hulett plans ‘transformative’ sugar milling and refining
CAPE TOWN – Tongaat Hulett, the sugar and property development group suspended from the JSE this year amid accounting irregularities, plans to establish a “transformative” sugar milling, refining and marketing business along the KwaZulu-Natal North Coast, chief executive Gavin Hudson said yesterday.
“The milling, refining and sugar marketing business will be implemented on a scale that has never been achieved in the sugar industry,” he said.
For years growers have been calling for equity participation in the milling and refining business, which would allow for their increased participation in the sugar industry value chain.
“The initiative is providing this opportunity, which is revolutionary for the industry,” Hudson said.
Shareholders would include all the current supply chain participants, including supplying sugar cane growers, and the shareholder mix would target black ownership of more than 50 percent.
Small-scale growers, commercial growers and equity partners would have an opportunity to partner in the business.
The proposed new entity follows plans by Tongaat to cut its exposure to the South African-based sugar business as part of a broader turnaround plan for the group.
Some of its owned sugar-cane farms are being sold to previously disadvantaged (PDI) farmers, so that PDI’s eventually make up 50 percent of the sugar-cane supply value chain.
Assets in the new business would be those owned by Tongaat Hulett’s South African sugar operations, and includes four mills, Tongaat Hulett’s stand-alone refinery as well as its animal feeds business, Voermol.
It would become a producer of sugar-related products, including speciality sugars, syrups and liquids.
World demand for sugar cane is shifting from sugar consumption to the growing relevance of the high-margin green economy.
Opportunities in bioplastics, ethanol and additional co-generation had been identified, which would provide opportunity to expand margins, lower the carbon footprint and participate in the growing demand for renewable products globally, said Hudson. The transaction for the establishment of the new sugar company was expected to be completed by December 2019.
“This is a great initiative. It will afford growers the opportunity to participate in the full sugar cane agriculture value chain. Growers will engage further with Tongaat to explore the details of the concept,” said Amatikulu Local Grower Council chairperson Dave Littley.