South Africa’s Tongaat-Hulett to invest in sugar production in Mozambique

26 January 2007

Maputo, Mozambique, 26 Jan – South African group Tongaat-Hulett said Thursday it would invest 1.3 billion rand (around US$180 million) in sugar production in Mozambique, where it has stakes in two sugar factories.

At the Xinavane sugar factory, in Maputo province, Tongaat-Hulett said it had reached an agreement with the Mozambican government for its stake to be increased from 49 percent to 88 percent, with the Mozambican state lowering its shareholding from 51 percent to 12 percent.

Most of the investment announced – 1.153 billion rand – will be applied in Xinavane in order to increase production from 61,000 tons in 2005 to 180,000 tons in 2009.

The chief executive of the South African group, Peter Straude, said in a statement that the new equipment to be installed at Xinavane would make it possible to crush 150 to 380 tons of sugar cane per hour and in 2007 and 2008 a further 6,500 hectares would be planted with cane in order for the factory to process 1.5 million tons, as compared with 509,000 tons in 2005.

Some of the additional production will be sold on the Mozambican market, but Straude plans to export most of it to the European Union under the terms of the Mozambican quota set as part of the Anything but Arms initiative for less developed countries.

In Mafambisse, in which Tongaat-Hulett already has a 75 percent stake, the aim is to plant a further 2,100 hectares of cane in order to boost production to 82,000 tons in 2009.

The group’s chief executive said he was confidant about prices as the European Union had promised that the price of sugar would remain fixed from 2009 to 2015 at the equivalent price of 19.6 US cents per pound.

Straude added that the cost of producing sugar in Mozambique was 85 cents per pound, which is lower than in Brazil. (macauhub)