The Kilombero Sugar Company in Tanzania, which Illovo Sugar South Africa is the majority shareholder of, has approved an expansion project to the value of $238.5 million.
To align with the country’s policy to achieve self-sufficiency by 2025, this new development will increase Kilombero’s sugar production by 144 000 tonnes from current levels of around 127 000 tonnes of sugar per annum, to 271 000 tonnes.
“A driving force behind the manufacturing expansion will be the almost three-fold increase in cane supply from Kilombero’s small-scale growers, from 600 000 tonnes currently to 1 700 000 tonnes,” says chairperson of the Kilombero Sugar Company, Ami Mpungwe.
“Importantly, the proposed new sugar factory has been sized so that all of the available cane will be crushed by end of December each year, in order to minimise disruptions and losses often caused by the onset of the rainy season.”
The expansion project has been under discussion and planning by the board of the company for several years.
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Doubling up on sugar production
In addition to more than doubling current sugar production in order to meet increasing customer demand of Kilombero’s leading Bwana Sukari product range, it will also involve:
- the construction of additional sugar storage and packaging facilities in order to reduce costs and increase the company’s branded pre-packaged capability;
- the cogeneration of electricity for the Kilombero manufacturing complex and for export to the national Tanzanian grid; and
- a 4 000 kilolitre increase in the production of ethanol at the adjacent ethanol distillery, bringing total annual production up to 16 000 kilolitres in order to meet growing local and East African export demand for potable alcohol.
Further local benefits of the project – five-years on from commissioning the new factory – are that:
- the significant increase in cane volumes supplied by Kilombero growers will triple the revenues paid to them by 2028;
- the total number of small-scale farmers supplying cane to the expanded company sugar factories will increase from 7 500 to between 14 000 and 16 000 growers, positively impacting directly an additional 50 000 people in the Kilombero valley surrounding the sugar operations;
- there will be an increase in direct employment by over 2 000 jobs both at the company and through the expanded grower cane supply;
- total taxes currently paid by the company are estimated to increase three-fold as a result of the expansion and improved business performance by 2028; and
- Kilombero Sugar Company’s total contribution to the economy will more than double.
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Biggest investment yet in Africa
Speaking on behalf of Kilombero’s shareholder, Illovo Sugar Africa, Gavin Dalgleish says that the investment in the expansion project is their biggest to date across the continent.
“We are tremendously proud to be partnering with the Tanzanian people in what is a landmark investment aimed at reducing the amount of sugar which has to be imported into the country every year, to meet consumption demand. By effectively reducing sugar imports by 144 000 tonnes, our estimates are that Tanzania will be saving $71 million in foreign exchange annually,” says Dalgleish.
The project construction phase is expected to take 25 months and completion is expected in July 2023.
