The South Africa Farmers Development Association (Safda) has welcomed the announcement that the entire sugar division of Tongaat Hulett Limited (THL) in South Africa has been acquired by Kagera Sugar Limited, a sugar manufacturer based in Tanzania.
This significant development for the South African sugar industry was made public today by Tongaat Hulett, marking a noteworthy milestone for both companies involved.
Kagera has been chosen as the preferred strategic equity partner for Tongaat Hulett Limited’s sugar division. The transaction includes all sugar assets in South Africa and those in Zimbabwe, Mozambique, and Botswana.
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‘We’ve been in limbo’
Rodney Mbuyazi, a sugarcane and livestock farmer in Empangeni, KwaZulu-Natal, described the news as a breath of fresh air. In his area, farmers supply Tongaat Hulett.
“We are extremely excited, especially from a black farmer’s point of view … We as farmers have not known whether we are going or coming. We have been sitting in limbo.”
Mbuyazi said as farmers they have been afraid to invest in their farming operations. “You don’t know what is going to happen tomorrow. It has been a sad state of affairs,” he added.
According to Dr Siyabonga Madlala, CEO of Safda, this is a huge milestone and does give some hope to their member farmers who were filled with fear of uncertainty of the availability of milling capacity.
“We receive this with great joy as almost 10 000 of our small-scale growers supply the Tongaat Hulett mills. Safda is looking forward to this deal being finalised. We also appreciate the intervention of the Industrial Development Corporation (IDC) to keep the mills running with the Post Commencement Finance. Well done to the business rescue practitioners” Madlala said.
CEO of SA Cane Growers Dr Thomas Funke also welcomed the announcement, reports Food For Mzansi journalist Sinenhlanhla Mncwango.
“This is an important step forward, but much remains to be determined. We will continue to monitor the situation closely as it develops,” Funke said. “The most important outcome will be the survival of growers’ operations and the protection of the livelihoods they sustain.”
Thumbs up to Tanzanian group
Kagera, a major player in the sugar sector, located in the north-western part of Tanzania, is part of a conglomerate with sugar assets spanning Tanzania, the Democratic Republic of Congo, and the Middle East.
The selection of Kagera is a significant moment for the South African sugar industry, according to a release issued.
In it, business rescue practitioners say, “The group is financially sound, with a solid track record. Its exposure to complementary sugar assets in Tanzania and the Democratic Republic of Congo offers relevant technical and operational knowledge to assist the turnaround of THL’s South African sugar assets.
“In addition, the sugar refineries in Oman and Bahrain will provide access to world-class technologies and expertise to improve efficiencies.”
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Glimmer of hope
For the South African workforce, this new partnership means job security. Kagera plans to continue THL’s operations as a multi-country group, offering technical support to improve efficiencies and sustain jobs, particularly in KwaZulu-Natal.
This acquisition is also poised to protect the livelihoods of small-scale growers involved in THL’s value chain.
Nassor Seif, managing director of Kagera, expressed confidence in their commitment to the South African market.
“The acquisition is in line with the group’s overall strategy to expand its operations throughout Africa, and its vision of becoming a leading sugar producer on the continent. We will extend the core values that have resulted in the success of our Group companies to the new Southern African operations to benefit employees, growers and ultimately the economy of the region.”
Further details on the transaction and how it will affect creditors will be detailed in upcoming monthly reports and incorporated into an updated business rescue plan. The developments from this acquisition represent a glimmer of hope for THL and the South African sugar industry, possibly indicating a brighter future for all stakeholders involved.
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