JSE-listed sugar producer Illovo Sugar has made a number of strategic disposals, investments and changes in structure that would result in a more streamlined South African business, it reported on Thursday.

It would also expand the group’s footprint and future earnings potential in the rest of Africa, it told shareholders in a statement.

The producer announced that it was planning to transfer its South African business to a wholly owned subsidiary from April 1, 2010.

Further, the sale of its Umfolozi sugar mill to a grower consortium had been concluded, while it had reached an agreement with TSB Sugar for the sale of its Pongola sugar mill.

In addition, the producer had bought a 30% stake in a new business entity, which had bought the Gledhow sugar mill from Ushukela Milling.

Illovo would also provide technical services to the new entity, in which paper and packaging group Sappi and a consortium of cane growers, Ushukela, also owned a stake.

Meanwhile, the group had entered into a joint venture (JV) with a local community at Maragra, in Mozambique, for the development of 4 000 ha of land into cane plantations over the next two years.

The project, which was situated about 40 km from Illovo’s Maragra sugar mill, would produce 400 000 t/y of cane and was linked with the doubling of the capacity of the sugar factory in the area to 150 000 t/y of sugar.

Further, the group had acquired an option to buy a 90% stake in the Búzi sugar estate, near Beira, in Mozambique, which could potentially lead to the construction of a sugar factory in the area in future, stated Illovo.

ZAMBIA EXPANSION

The second phase of the group’s expansion project, in Zambia, which increased the capacity of the Nakambala sugar mill to 450 000 t/y of sugar, meanwhile, had been completed by the start of April, as planned.

The producer said that it had also acquired a majority stake in a cane growing company that delivered cane to its Nakambala mill. The company was producing about 325 000 t/y of cane, at present, with the potential to increase this output further.

SUGAR EXPORTS

Illovo Sugar had also secured an effective route for the export of its products to the European Union (EU) market from October by concluding an investment in a JV partnership with British Sugar.

Duty-free and quota-free sugar exports from Africa, the Caribbean and Pacific exporters and from least-developed countries into the EU would come into effect on October 1.

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