The Tongaat-Hulett Group (THG) plans to increase its annual sugar production capacity in Mozambique by 155 000 tons following the approval of R1,3 billion to be used to expand its operations there.
THG, which set up operations in the country six years ago, recently announced the planned expansions at Xinavane and Mafambisse were directly aligned to THG’s strategy of growing earnings through expanding production in low-cost regions that have superior market realisations.
“We will expand the low-cost sugar production at our two factories in Mozambique from 115 000 tons in 2005 to over 270 000 tons when the EU markets open up to Least Developed Countries’ (LDC) sugar producers. The delivered price will remain fixed from 2009 until 2015 at the equivalent of 19,6 US cents/lb. Our targeted cash cost for producing sugar in Mozambique of 8,5 cents/lb compares favourably with Brazil,” said Tongaat-CEO Peter Staude. THG spokesperson Vuyo Kona said commissioning of the expanded Xinavane factory would happen in April 2009.
Cane-growing activities in this mill area would be expanded by planting an additional 6 500ha under irrigation in 2007 and 2008. Kona added the Mafambisse expansion would see another 2 100ha planted to cane, and would increase the sugar mill’s annual production to 82 000 tons over the next two years. THG announced plans to then increase the mill’s production by another 34 000 tons a year, bringing eventual total yearly production to 116 000 tons.
“All the additional sugar production will be sold partially in the domestic Mozambique market with the balance exported to the in terms of Mozambique’s duty- and quota-free access from 2009 under the Everything-But-Arms initiative for LDCs,” Staude added.
Mozambique’s economy will benefit from the creation of 6 638 and 2 145 new jobs in Xinavane and Mafambisse respectively. – Lloyd Phillips
