Starafrica hampered by law demand for sugar on the local market

Zimbabwe’s  biggest sugar refiner starafricacorporation, which is slowly emerging from near-collapse, says it will  maintain its sugar output at 300 tonnes per day — half its capacity — due to low demand on the local market.

Last year the company installed a new $6 million plant it acquired from India following a bailout from one of its major shareholders, National Social Security Authority (NSSA), and increased capacity by 33 percent to 600 tonnes of sugar per day.

However, the company said off take of its product remained low, restraining output.

The company has not resumed exports but it was recently granted approval by global soft drinks maker, The Coca Cola Company (TCCC), to supply granulated sugar to its plants in Southern Africa.

This entails that the company sends regular samples for testing to laboratories in the UK and China to ensure the sugar does not carry residual pesticides which are used by sugarcane growers.

Speaking after a tour of the plant by Industry Minister Mike Bimha, Starafrica general manager Marvellous Sibanda said operating the equipment at below capacity increases costs and result in inefficiencies.

“At the moment off take has to be increased (for the plant) to run at installed capacity of 600 tonnes per day. The nature of a refinery is that you have to run it for 24 hours, seven days a week because it’s expensive to start and shut down,” he said.

To avoid shutting down the plant due to power and water shortages, he said, the company had secured a dedicated line from the power utility to ensure constant power supplies  and had also made arrangements with the local authority for regular water supplies.

Sibanda said 70 percent of the company’s output was being taken by manufacturing companies including Afdis, Delta Beverages and Schweppes.

Sibanda said the country has some of the best conditions in the world to grow sugarcane  but was underutilising its potential.

Currently, South Africa is the biggest producer in Africa and produces 2.4 million tonnes a year compared to Zimbabwe’s 600 000 tonnes.

Brazil, which produces 40 percent of the world’s sugar, remains the biggest producer while India remains the biggest consumer, taking in 37 million tonnes per year.

Chief operating officer Regis Mutyiri said the firm was struggling to dispose of assets as it bids to pay creditors who are owed $20 million.

“We still have the two assets, the local one we have failed to dispose of because of liquidity challenges. We haven’t disposed the Botswana asset, we are still looking for potential buyers,” he said.

The company has been struggling to pay workers, having stopped operations for 15 months to facilitate the upgrade of its refinery.

Its major shareholders include the National Social Security Authority (NSSA) which holds an 24 percent stake in the company, Old Mutual and ZSR Investment UK which own 10.7 percent and 5.84 percent respectively.- The Source

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