Sweet success for Tongaat Hulett

The company’s “future revenue stream would benefit significantly from electricity and ethanol developments” and it continued to work with government about establishing “an appropriate regulatory framework for both electricity generation and ethanol production from sugar cane,” said Tongaat Hulett CEO Peter Staude at the release of the company’s half-year results.

Tongaat Hulett produced 52MW of electricity at its four SA mills, and this could be increased to between 320MW and 360MW. Converting a single sugar mill for electricity generation and making it energy efficient would cost about R3 billion, said Staude in his 2012 annual report. If the biofuel industry in SADC developed, a substantial portion of Tongaat Hulett’s raw sugar exports could be diverted to ethanol in future.

Converting SA’s current export sugar will result in a 5% blend equivalent to 600 million litres of ethanol per year. The SA fuel market consumes 12 billion litres of petrol a year. “If Tongaat Hulett converted one of its four South African mills to ethanol it would require an investment of approximately R700 million and would produce about 125 million litres per annum,” said Staude.

Meanwhile, Tongaat Hulett’s profit from operations grew by 25% to R1,313 billion for the six months ending 30 September 2012, from R1,047 billion in the comparative period in 2011. Headline earnings increased by 30,5% to R654 million, benefiting from a 9% growth in sugar volumes with a related reduction in the cost of production, and a R244 million injection from the sale of land for development.

“Operating profit from SA sugar operations, including the downstream sugar value added activities, increased by 13% to R221 million,” said Staude. “The agriculture, sugar milling and refining operations continued to recover, with operating profit amounting to R99 million (compared to R54 million in the comparative period in 2011). The various downstream sugar value added activities recorded profit of R122 million (compared to R142 million in 2011). Export and local market sale volumes totalled 271 000t (253 000t in 2011).”

Operating profit in the Mozambique operations rose to R270 million from R267 million, while that of Zimbabwe’s sugar operations increased to R437 million from R364  million, and that of the Tambankulu sugar estate in Swaziland rose to R41 million from R30 million.