Zim move boosts Tongaat sugar operations

Harare - Rising cheap imports of sugar are causing problems for Tongaat Hulett's [JSE:TON] Zimbabwe operations, but the agro-processor received a reprieve after the Zimbabwean government moved to stop import permits, Hippo Valley Estates CEO Sydney Mutsambiwa said on Tuesday.

Hippo Valley, which is controlled by Tongaat Hulett, is listed on the Zimbabwe Stock Exchange and expects to tap into the regional export market. It has been hobbled by dry weather conditions in Zimbabwe but expects to maintain production levels recorded last year, Mutsambiwa said.
“We have the threat from uncontrolled imports. It is still a problem; we usually have a peak in imports of table sugar but we are assured by authorities that import licences (for sugar) are no longer being given out,” Mutsambiwa told Fin24 in an interview in Harare on Tuesday.

Hippo Valley produced 228 000 tons of sugar in the year to end-March 2015, a 5% decrease from the prior year period. Revenues however rose 8% to US$146.8m although operating profits declined 15% to $16.2m.

Tongaat Hulett also controls a significant stake in another Zimbabwean sugar producer, Triangle Sugar Corporation. The Tongaat Hulett-owned companies in Zimbabwe have embarked on a private cane grower scheme supporting private farmers.

The private farmers supplying the Hippo Valley mill delivered 486 329 tonnes of cane during the 2015 year. This was a 10% rise on the previous year, and the company is geared to expand cane production from this source.

“The private farmers are doing well and we are satisfied with all the initiatives that we have put in place to support them. As we speak, out of their total land area of about 15 800 hectares about 12 000 hectares has been ploughed out and replanted,” said Mutsambiwa.

He added that the private farmers will deliver new cane crop, with yields expected to be higher because of the company’s support. Hippo Valley and Triangle have faced pressure from indigenous groups demanding to be resettled on part of their land, with the government also threatening to revoke its land leases over alleged complacency in complying with indigenisation policies.

Zimbabwe and southern African are facing dry weather conditions that have affected food productivity in the region. Food shortages are looming, with Zimbabwe already reliant on imports of the staple maize crop from Zambia and South Africa.

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