Mozambique: South African sugar company announces restructuring

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Mozambique: South African sugar company announces restructuring

3:17 CAT | 30 Aug 2019

File photo: Lusa

South African company Tongaat Hulett has today announced how it intends to restructure its business in Mozambique to address “challenges” in the sugar sector, which include a decline in price and “dumping”.

The Mozambican government said this week that it was in contact with potential investors in the Xinavane and Mafambisse sugar mills in southern Maputo and central Sofala provinces, in the context of uncertainty about the continuation of Tongaat Hulett as a majority shareholder.

In a statement issued today, the South African business group said it was in contact with the Mozambican executive with the aim of identifying solutions to the difficulties it faces.

“These discussions include details of the business restructuring and possible introduction of additional investors to address the financial and structural pressures currently being addressed by the company,” the note says.

Challenges in Mozambique include a continued decline in sugar sales and the need for more consistent help in preventing low-priced international imports from entering the market and affecting domestic production.

Tongaat Hulett points out that the constraints on its operation in Mozambique are more severe in Mafambisse because of the unique characteristics of the factory and the consequences of Cyclone Idai.

Until the current crisis is over, the South African firm says it remains focused on its activities in Mozambique. Output at the Xinavane refinery averaged 340 tons per day last week, with a new peak of 376 tons on 28 August.

“Achieving project yield of 400 tons of refined sugar per day is the current focus, and any issues that prevent this from being achieved are being addressed,” the document reads.

In addition to Xinavane and Mafambisse, Mozambique has two more sugar factories and all of them have seen in recent years significant investments in an effort to recover the stagnation in which the sector was due to structural problems and the civil war that ended in 1992.

Source: Lusa