Tongaat Hulett modestly optimistic about the future

Sugar and starch and prop-erty company Tongaat Hulett reports that the R1,3-billion agricultural and milling expansion projects the company is implementing at Xinavane and Mafambisse, in Mozambique, are progressing well towards substantially increased production in 2009.

“The 2008 sugar production at Xinavane is increasingly being impacted on by the modification and upgrading of the existing mill, in order to increase production in 2009 by 140% over 2008,” said CEO Peter Staude.

He noted that the planting of an additional 3 509 ha had been completed and that this cane was growing well. An additional 5 000 ha was planned to be planted by the end of the year and the related land preparation had been substantially completed.

“Sugar production in 2008 at Xinavane is expected to increase to 75 000 t, from 67 000 t last year, and at Mafambisse to 59 000 t, from 41 000 t last year. “We are optimistic about the future and have great expecta- tions because the agroproces- sing industry has a lot of opportunities.”

Staude said that the current unsustainable macroeconomic conditions in Zimbabwe, including hyperinflation, foreign currency shortages, the nonavailability of key inputs and price controls, were challenging the profiability of the Zimbabwean operations.

“Our attention is currently on ensuring that the infrastructure and skills base is maintained. “Tongaat Hulett’s operations are positioned for a rapid turnaround once the macro-economic conditions in Zimbabwe are restored.”

He said that the below-average 2007 South African sugar crop resulted in lower export sales volumes in the first half of 2008 and increased costs of production.

Raw sugar export volumes from South Africa reduced to 6 000 t, from 84 000 t in 2007. South African domestic sales in the first half of the year increased to 230 000 t, from 210 000 t, last year.

South African sugar production this year is estimated to be 722 000 t, from 604 000 t last year.