Private investors have reportedly put up R1,8-billion to build a new sugar processing facility in the rural Makhathini area, in KwaZulu Natal, to possibly produce ethanol and other sugar products.

Trade and Industry DG Tshediso Matona said that the project, for which the Department of Trade and Industry (DTI) had partnered with the local municipalities and local sugar growers, was an important rural development project supported department.

“The role of the DTI is to facilitate investment into Makhathini,” said DTI director agroprocessing Imamaleng Mothebe at a South African Sugar Association (Sasa) function marking the opening of the sugar season on Thursday.

“The investment into the project is 100% private-sector funded through development financing institutions, as well as some members of the sugar industry and other private investors.”

Mothebe revealed that State-owned power utility Eskom was one of the stakeholders that form part of the committee on the Makhathini project.

“There is work between Eskom, the Industrial Development Corporation and the Central Energy Fund around issues of cogeneration and ethanol,” she said.

She explained that the prefeasibility studies for the project had already been completed, and that a full feasibility study, with an environmental-impact assessment study, was currently under way, which she expects to be completed soon.

“As it stands now, pending the outcome of the feasibility study, the first option is ethanol production, and obviously there will be some level of sugar production as well for other purposes,” she said.

Matona said that the project would create 1 800 direct jobs.

“The biggest advantage of the project is that it would justify investment in much needed critical infrastructure within one of the least developed regions within the country. Once completed, the improved infrastructure in the area should generate more investments in areas other than just sugar.”

Matona said that the project was already part of the DTI’s current Industrial Policy Action Plan (IPAP).

“For South Africa, it is important that an appropriate policy environment be created that would establish real markets for renewable energy products,” he said.

“This will not only improve our overall carbon footprint, but would unlock substantial further investments in the sugar sector.”

Matona said that a scaled-up IPAP was currently under development, in which greater priority would be given to agroprocessing subsectors.

“A draft strategy for agroprocessing that is aligned with primary agricultural strategies is being developed and should be finalised in the near future,” he said. “Given the uniqueness of distortions in the agricultural field, it is important to have national structures in place that respond to these challenges to ensure the establishment of a fair and equitable environment for the optimal development of the sector in South Africa, as well as the region.”

Sasa chairperson Martin Mohale said that the markets for sugar-cane based renewable energy have manifested as a major opportunity for the South African sugar industry, adding that the nonparticipation in those markets could potentially impact negatively on the sustainability of the South African sugar industry and its competitive position in comparison to global sugar industries where renewable energy income streams are introduced on a mandatory level.

Mothebe said that the Makhathini sugar-processing facility will be commissioned in 2011.