Ayanda Mdluli
Tongaat Hulett would spend up to R2.8 billion over the next two and a half years on electricity generation projects, the agri-processing firm said last week. The company has committed between R10 million and R15m to the project in this financial year.
“It is difficult to predict how much will be committed next year as it depends on when the formal procurement process gets under way. Each of the mill projects will cost between R2.2 billion and R2.8bn, and take about 30 months for construction,” said Nico Kruger, the renewable energy executive at Tongaat Hulett.
The plan was still in its development phase and could lead to the creation of between 500 and 1 000 jobs during the 30-month construction period. Once a plant was up and running, 23 000 new jobs could be created and a further 20 000 jobs that were at risk over the next five years could be protected.
Of the 14 sugar mills in South Africa, Tongaat Hulett owns four: the Maidstone, Darnall, Amatikulu and Felixton mills.
Kruger said the electricity projects at the mills were “large and complex” and had a range of “streams” that needed to be completed before a plant could be built. A series of engineering design, environmental impact assessments (EIAs), water permits, funding structures, procurement processes, and supply contracting were some of the issues that had to be overcome before a project went ahead.
“While we do have a delay on the procurement process while we wait for a process, which includes electricity from sugar cane fibre, we are progressing many of the other streams to prepare for the projects, such as improving the level of accuracy on the capital estimates, progressing key design work and completing the EIAs,” he said.
Kruger said it was difficult to give timelines, but noted that many aspects of the first project were progressing.
He said the job creation from an operating electricity plant came from two sources, direct new jobs, which only totalled about 50, and the agricultural jobs that would arise.
South Africa’s cane production has over a decade declined from 25 million tons a year to about 18 million tons a year.
The introduction of renewable electricity into the product mix should provide additional value from the cane stalk to allow the industry to reverse the production decline and restore cane production to the 25 million tons a year level.
In addition, this would potentially create 23 000 new jobs and protect a further 20 000 jobs, which could be at risk over the next five years if the industry was unable to derive additional value out of the cane stalk. Most of these jobs were in deep rural areas, where job creation potential was limited.
Shares closed 1.2 percent higher at R94.50 on Friday.