TONGAAT HULETT TURNAROUND STRATEGY PAYS OFF IN FY20 RESULTS

 Tongaat Hulett today released its results for the year to end March 2020, which showed the group had posted an operating profit of R3.3 billion against R551 million the previous year. If the Zimbabwe operations are excluded, operating profit improved by just over R1 billion, increasing to R375 million against a loss of R650 million the previous year.

The group recorded an 18% increase in revenue to R15.4 billion from R13.1 billion previously, while the headline earnings per share improved 111% to 90c from a loss of 823c in the previous year. Cash flow from operations increased 62% to R2.1 billion from R1.3 billion previously.

Tongaat Hulett’s improved results reflect the steps taken to stabilise and restructure its business to become more profitable and sustainable. The performance was achieved in a market characterised by weak economic growth, significant business uncertainty and volatility. Hyperinflation accounting was used for the first time in the 2020 financial year for the operations in Zimbabwe, which contributed to increased revenue in Zimbabwe.

Strategic highlights for the year Included:
• Worked to improve the safety of workplaces, and deepened relationships with stakeholders: Improved communication both internally and externally and worked closely with governments across geographies in which we operate;
• Improved operational performance: Significant improvement in all sugar operations, solid performance in starch and glucose and continued land sales;
• Enhanced cash position and entered into transactions to pay down debt: Improved cash flow and working capital management, paid down 60% of a loan in Zimbabwe; moved creditors from 30 to 60 days and signed transactions of more than R6 billion to meet debt reduction milestones;
• Managed and bought down our cost base: Rightsized our structures and reduced our headcount, deepened strategic sourcing, reduced our office footprint, optimised our route to market in sugar;
• Improved sugar production: Crushed one of the largest South African sugar crops in years and ramped up production in Mozambique’s Xinavane refinery;
• Grown market share: Local sales in Mozambique increased by 22% and we increased sales and market share in South Africa, white sugar market share over 35% and overall share of >27%. We relaunched our packaging in South Africa and became a member of Proudly South African;
• Appointed a strong leadership team and a new Board;
• Strengthened governance and financial controls: Adopted zero based budgeting, increased oversight and financial control, new three-year business strategy and implementation of new systems and improved management reporting;
• Repositioned and revitalised assets: Turned Mozambique’s Mafambisse mill from loss-making to break-even, reduced loss in SA sugar operation and optimised our farming operations in South Africa;
• Progressed transformation and empowerment: Created the largest empowerment cane farming enterprise in SA and began the biggest farming initiative in Zimbabwe since independence; and
• Optimally improved and better positioned human capital: Employed specific skills to improve our bench strength, Implemented performance management across our business and brought in capability in sales, logistics and route to market.

Commenting on the results, Tongaat Hulett CEO Gavin Hudson said:

“After a significant amount of hard work, we are pleased to report that our strategy to turn Tongaat Hulett into a low-cost sugar producer and a leading agri-business in Africa is starting to manifest in our financial results. More remains to be done and we are fully committed to achieving our goals.

“The financial mismanagement uncovered in early 2019 was devastating for Tongaat, and affected every aspect of our business. To get Tongaat back to operating efficiently, strategically and profitably required nothing short of a fundamental restructuring of our business. We executed this swiftly and also undertook a sweeping review of our policies, procedures and processes as well as every aspect of our governance.

“The work that we have done to restructure Tongaat Hulett has allowed us to enter COVID-19 as a leaner, fit-for-purpose organisation better able to weather the pandemic and other challenges as well as lay the groundwork for a return to sustainable value creation for shareholders.

“Given the challenges we have faced, I am exceptionally proud of these results for the 2020 financial year. We have emerged as a better managed, better controlled and more resilient business with a much healthier culture.”

TONGAAT HULETT AND PARTNERS DRIVE AWARENESS CAMPAIGN ON COVID-19

Durban, 20th July 2020: Tongaat Hulett this weekend launched a targeted campaign to drive awareness amongst key communities on COVID-19, including the importance of practicing good hygiene to reduce the risk of contracting the virus.

A total of 400 hand sanitizers, soaps as well as 1 000 cloth masks were distributed to children and adults in the areas of Magwaveni, Hambanathi and Tongaat Central in KwaZulu-Natal during the drive.

Tongaat Hulett Sugar Corporate Affairs Executive Nkonzo Mhlongo said that in the past few weeks, Tongaat Hulett had noted a significant increase in the number of company employees that were testing positive for COVID-19.

“We have also received an increased number of requests from the neighbouring schools including Nkosibomvu and Mbonisweni requesting Tongaat Hulett to sponsor the fumigation of their schools. To ensure an integrated approach in the company’s response to COVID, Tongaat Hulett took a decision to form a COVID-19 Think Tank with stakeholders in and around the Tongaat area,” said Mhlongo.

The members of the Think Tank included eThekwini Municipality – Health Unit; Dube Tradeport, ACSA, SAPS, Tongaat clinic and the Councillors for Wards 58, 61 & 62 in KwaZulu-Natal.

A key objective of the Think Tank was to create a platform for all stakeholders to share information regarding COVID-19. In addition, the Think Tank sought to identify sustainable interventions and programmes that will ensure that community members in and around Tongaat and Stanger remain healthy and safe during this time of COVID-19.

Mhlongo said: “It was against this background that Tongaat Hulett and its partners took a decision to organize an Awareness Campaign on 17 July 2020. All the stakeholders also took the decision to invest 67 minutes of their time and commemorate Nelson Mandela International Day.

The campaign focused on five key messages:

1) Act as if you have the CORONA virus – keep your distance – wash and sanitize your hands – and wear your mask
2) Limit your movement – stay at home
3) The CORONA virus is spread through reckless human conduct and behavior
4) Wearing a mask is mandatory – the mask protects the people around you
5) Practice social distancing and washing of hands regularly

BACKGROUND

COVID-19 is more than a health crisis as it has pushed communities and economies to a breaking point. It is rapidly exacerbating an ongoing food security and nutrition crisis. The disruptions have resulted in many businesses shutting down and people losing jobs.

Government has continued to put measures in place to limit the spread of the virus and provides statistical information for the various provinces. This statistical information shows that KZN continues to see a spike in COVID cases with eThekwini being one of the metros recording increased numbers over the last few weeks. The KZN Department of Health had reported that the province contributed 31% (last week) of the new cases reported nationally and was listed as the fourth highest countrywide.

The Nelson Mandela International Day is an annual international day in honour of Nelson Mandela, celebrated each year on 18 July Mandela’s birthday. South Africans including corporates are called to devote 67 minutes of their time helping others. For 67 years, Nelson Mandela dedicated his life to the service of humanity.

In December 2015, the United Nations General Assembly also decided to extend the scope of the Nelson Mandela International Day to be utilised to promote humane conditions of imprisonment, to raise awareness about prisoners being a continuous part of society and to value the work of prison staff as a social service of particular importance. The General Assembly also approved the Standard Minimum Rules for the Treatment of Prisoners and approved that they should be known as Nelson Mandela Rules.

TONGAAT HULETT ANNOUNCES SALE OF ESWATINI BUSINESS

[Durban, 17 June 2020]: Tongaat Hulett today announced it had entered into an agreement with Eswatini’s Public Service Pensions Fund (the PSPF) to sell Tambankulu Estates, its Eswatini agri-business, for R375 million.

Tongaat Hulett CEO Gavin Hudson said the sale of Tambankulu was fully aligned with the company’s turnaround plan, and would allow Tongaat to pay down further debt.

“Our number one priority is to ensure the long-term sustainability of Tongaat, and a key element of this is paying down our debt as quickly as possible. Tambankulu is a quality, well-run business that is not core to our larger sugar business. This was a reasonable offer based on a thorough due diligence and independent valuation input that supported the price, and after due consideration the board decided it would be in the best interests of the company and its shareholders to dispose of this asset”, he said.

“PSPF is also considered a strong strategic shareholder of this business going forward, which was a key consideration for the board.” said Hudson.

Tambankulu is the largest independent sugarcane estate in Eswatini, located on two agricultural estates near the Black Umbuluzi River in north eastern Eswatini. The estate has more than 3 700 hectares of land under sugarcane, and is producing 62 000 tons of sucrose a year. Tambankulu’s farms are modern, using high tech irrigation systems, fertigation, artificial ripeners and herbicides. The estate delivers its sugarcane to the nearby Simunye and Mhlume sugar mills.

The PSPF is a public organisation that was established in 1993 for the management and administration of pensions for public sector employees in Eswatini. The scheme is run as a defined benefit pension fund and provides retirement annuities, and death disability benefits for its members and their dependents.

“We are confident about the future of Tongaat, and that the disposal of Tambankulu will help to further position the group for longer-term sustainability and value creation for Tongaat shareholders.” said Hudson.

BACKGROUND

In terms of Tongaat’s turnaround plan, apart from implementing greater operational efficiencies to improve the group’s cash flow and other initiatives, the company has put in place a number of strategic business partnerships to raise cash, step-change the company’s transformation initiatives and build strong partnerships.

These include:
• Within the SA farming operations an initiative was launched through which Tongaat is optimising its direct sugarcane farming activities in SA. As part of this initiative, Uzinzo Sugar Farming, a large-scale black-owned sugarcane farming enterprise was created to farm some of this land.
• Within its SA milling operations, Tongaat is creating an initiative aimed at establishing a well-structured competitive sugar business on the KwaZulu-Natal North Coast that mills, refines and sells sugar and associated products, with equity held by, amongst others, farmers.
• In the property and land portfolio, a special purpose vehicle is being created to facilitate diverse investment partnership opportunities to deliver a stable and sustainable long-term earnings platform.
• Tongaat officially launched project Kilimanjaro with the Zimbabwe government in November 2019. The project aims to increase productivity of land through the development of 4 000 hectares of new land for sugarcane farming for the benefit of 200 farmers.

TONGAAT HULETT PARTNERSHIP WITH JOBS FUND CONTINUES TO DELIVER SIGNIFICANT BENEFITS TO RURAL COMMUNITIES

A partnership between Tongaat Hulett and The Jobs Fund to accelerate socio-economic transformation in rural communities, which began in 2014, has proven its worth with more than 5 800 people still benefitting from the project.

The initiative, which created more than 3 000 jobs in Northern KwaZulu-Natal – an area of significant unemployment and poverty – has delivered significant on-going benefits to thousands of people who would otherwise have limited sources of income. About R82-million has been distributed directly to beneficiaries in the past four production seasons – a significant amount given that it excludes the wage earnings generated by the project.

Tongaat Hulett CEO Gavin Hudson said: “Tongaat has for many years invested in surrounding communities to help address pressing socio-economic challenges. This initiative is a clear example of how business can work together with government in a sustainable manner to not only address unemployment, but to deliver ongoing benefits to communities.

“We are delighted that more than two years after the completion of the project, it continues to make a significant impact by providing incomes to thousands of people while at the same time productively farming sugarcane. For us, it was money well spent and that is most gratifying.”

Najwah Allie-Edries, The Jobs Fund Deputy Director General: Employment Facilitation commented: “The Jobs Fund recognises the importance of developing strategic partnerships that result in innovative solutions to our country’s unemployment crisis. It is inspiring to know that our partnership with Tongaat Hulett has yielded a sustainable income source to communities most in need. The Jobs Fund is also deeply appreciative of the communities’ willingness to partner with us, too often they have been let down, without their co-operation we would not have had a viable project.”

Tongaat and The Jobs Fund partnership together invested a total of R305 million in the initiative. It resulted in almost 11 000 hectares of sugarcane being planted over four years, with education, training and food security forming critical elements of the project.

Hudson said Tongaat was committed to making an ongoing contribution to social upliftment, rural development and job creation, particularly at this challenging time with the Covid-19 pandemic which was having a devastating impact on the economy.

“It is now more important than ever that companies such as ours step up and play their part. We are doing so in a variety of ways and the sustainability of the initiative with the Jobs Fund is an important element of how we believe business can support communities,” he said.

Project Background

The project ran from 2014 to 2018. Key highlights of the initiative included:
• A total of 10 972 hectares of sugarcane was planted, made up of 10 082 and 890 hectares of dryland and irrigated sugarcane, respectively;
• The creation of 3,019 new jobs in less than four years, against an initial commitment to create 2,874 jobs;
• Jointly funded by Tongaat Hulett, which contributed R155 million, and The Jobs Fund with R150 million.
• Tongaat Hulett spent a further R103.2 million on additional contributions, which included community social facilitation work, overall project management and Socio-economic Development (SED) initiatives.
• Working in multiple land tenure arrangements and traditional authority structures, including both primary cooperatives and community trusts, with a total of some 5 897 member beneficiaries;
• Supported by the Department of Economic Development, Tourism and Environmental Affairs, the KZN Provincial Planning Commission and the Ingonyama Trust Board
• A total of 1,286 local community members were trained in a range of qualifications, from multi-year tertiary qualifications and certificate courses in farm management to on-the-job training.
• SED initiatives included food security, education and training, access to water for communities and livestock and cattle management, implemented through a range of partnerships with multiple stakeholders, including community members, Municipalities, Traditional Councils, the KwaZulu-Natal Department of Education, and the KwaZulu-Natal Department of Agriculture and Rural Development.
• Partnerships to address skills upliftment and training included the Owen Sitole College of Agriculture, the South African Sugar Research Institute and the Mfolozi Technical Vocational Education and Training (TVET) College.

Dr Jeff McCarthy, the project’s independent monitoring and evaluation specialist, said the rural development and business process lessons of the project were particularly important, and the project could be regarded as best practice.

“Despite an extraordinarily difficult local land and political environment, project managers have been supported by stable partners with a long-term outlook. The local managers, in turn, have used a style that is sensitive to the community and they have implemented bespoke solutions to the unique characteristics of the area.

“Overall, communities have been pleased with the use of local labour, particularly with the unusually high proportion of women workers that have been engaged.”

COMMITTED TO COMMUNITY: HEALTH PARTNERS IN A FUNCTIONAL COMMUNITY PROJECT DURING COVID-19

While great uncertainty remains about the tough times ahead, the opportunity for business to band together and assist those at the forefront of the fight against the pandemic and malnutrition is equally significant. One such partnership comes from Tongaat Hulett, NCP Alcohols, Spring Lights Gas (SLG), Nampak Rigid Plastics and Southern Lodestar Foundation in creating a functional project to be implemented in KwaZulu-Natal (KZN) – “Committed to Community: Health Partners during COVID-19”.

The aim of the project is to donate 250 000 litres of hand sanitiser to all provincial hospitals and clinics throughout KZN with the assistance of the Department of Health. It will also ensure that 60 000kg of instant porridge is distributed in areas with children in desperate need for support. The Department of Education feeds 2.4 million learners under the school feeding programme and 1.3 million have been defined as vulnerable. The closure of schools because of COVID-19 has increased the vulnerability of children from food insecure households facing severe economic hardships.

Tongaat Hulett has four sugar mills in KZN and works extensively with farmers in the province, many of whom are small-scale and land reform growers. Tongaat Hulett will supply the molasses for the manufacturing of the sanitiser and make use of its milling facilities to distribute the sanitiser to clinics and hospitals. The supply of molasses towards the project will go a long way in assisting the production of the much needed sanitisers.

“Our top priority as Tongaat Hulett is the health and safety of all our stakeholders. As a company, we have put measures in place to limit the effect of Covid-19 on our employees and stakeholders in all six countries where we operate. We have also put in place sound business systems to ensure that business continues during the lockdown period” said Simon Harvey, MD: Tongaat Hulett Sugar Operations.

The COVID-19 pandemic has thrown the world in turmoil on a scale never seen before. Here in South Africa, the country has entered a 21-day national lockdown to flatten the curve of infection and stop the spread of the virus.

NCP Alcohols produces fermented alcohol to various industries, including pharmaceutical markets, and will contribute to the production of the alcohol, blending of the sanitiser and drumming as part of the joint effort.

SLG supplies gas nationally with most of its customers situated in KZN, providing environmentally clean and cost-effective energy and tailored technical service to this project. The energy used to produce the alcohol in the sanitizer will be supplied by SLG.

Nampak Rigid Plastics is the largest diversified packaging manufacturer in the region and are contributing the drums into which the sanitizer will be packed. The company invests significant time and resources into the development of sustainable products and also provides general support to communities located near its facilities.

Southern Lodestar Foundation assists with nutritional intervention amongst the most vulnerable communities in South Africa and neighbouring countries. The Foundation has partnered with Millhouse International to develop a highly nutritious instant porridge – high in protein, vitamins and minerals.

The rollout of the” Committed to Community: Health Partners during COVID-19” project will take place with the cooperation of the Department of Health in KZN. “COVID-19 has brought to focus the importance of public private partnerships in addressing societal challenges in the province,” said Dr Sandile Tshabalala, Head of Department within the Department of Health. “The sanitizer will slow the spread of the virus and the instant porridge will be allocated to children and vulnerable households. As a Department, we welcome these significant contributions, and continue to encourage all our social partners to join hands with us in fighting the pandemic.”

TONGAAT HULETT AND SOUTHERN LODESTAR FOUNDATION TEND TO HYGIENE AND NUTRITION NEEDS IN WAKE OF CORONAVIRUS

With the coronavirus putting severe strain on hygiene and nutrition resources, agro-processing group Tongaat Hulett and Southern Lodestar Foundation are distributing thousands of hand sanitiser kits and instant porridge packs in KwaZulu-Natal.

As the government battles the possibility of a runaway coronavirus outbreak, Tongaat Hulett and the Foundation are working with the KZN Department of Health to safeguard the health of several communities in and around the Maidstone, Darnall, Amatikulu and Felixton sugar mills on the North Coast.

Tongaat Hulett has allocated R445 000 for the procurement and distribution of 7 500 hand sanitiser kits containing antibacterial soap, hand sanitiser and tissues. These will be distributed through the Tongaat clinic, Ndwedwe clinic, Stanger hospital, Ngwelezane hospital and Catherine Booth hospital which are frequented by Tongaat Hulett employees, their families and stakeholders.

The Southern Lodestar Foundation which supports communities in the fields of health, nutrition, physical activity and nutrition education, will distribute 2 000 instant porridge packs to indigent children living around the five health centres.

The closure of schools in the wake of the coronavirus pandemic has had a negative impact on learners who relied on school feeding schemes for a daily meal. Thus, many children have been going without nutritious food.

Sne Ndlela, Socio-economic Development Executive, said: “As a business that works in various communities, we were concerned about the health and wellbeing of men, women and children during the coronavirus crisis.

“Humanity is presently facing a potential global calamity, and as a responsible company, we saw an opportunity to help people in vulnerable households to improve their hygiene and arrest the spread of the virus.”

She said Tongaat Hulett was committed to working closely with the KZN Department of Health in promoting safe and healthy communities particularly in rural areas.

Over the years, the company has partnered with the Department to promote the “HIV and Me” programme which supported 5 000 learners in 10 schools, within the Ilembe district municipality, who were infected or affected by HIV and AIDS.

The Department has willingly agreed to use their facilities as distribution points for the hand sanitiser kits and packs of instant porridge.

André Redinger, founder of the Southern Lodestar Foundation, said the closure of schools and the current lockdown posed a massive problem for children who depended on the daily meal they received at school.

“Our mission is to alleviate hunger in vulnerable children by providing feeding and nutrition education programmes to allow these children to thrive at school, and to inspire them to strive for personal and community development.

“Nutrition is the cornerstone of a healthy life. Nourishment is key for any child to grow mentally and physically. Therefore, we decided to donate 2 000 units of instant porridge containing wholegrain maize which is high in energy, fibre, protein and vitamins. These will be distributed through the identified health centres,” he said.

“As the Department of Health in KwaZulu-Natal, we welcome the donation from Tongaat Hulett and Southern Lodestar Foundation. It will go a long way in limiting the spread of the Corona virus and in helping vulnerable children access nourishment, said Dr Sandile Tshabalala, Head of Department”. We are also encouraging other stakeholders in the province to join hands with the Department in making our communities safe and healthy. Companies and stakeholders that are keen in contributing are welcome to contact the office of the HOD in the province.

TONGAAT HULETT SELLS STARCH DIVISION TO BARLOWORLD FOR R5.35 BILLION

Tongaat Hulett Limited confirmed today that it would sell its Starch business to Barloworld Limited for an enterprise value of R5.35 billion.

The deal will have a significant impact on reducing Tongaat’s debt.

In terms of the agreement, all jobs at the Starch business will be retained, with the transfer of employees’ conditions of service intact.

Tongaat CE Gavin Hudson said: “This was a compelling offer for our Starch business, which the board reviewed in detail.”

“Our number one priority is to ensure the long-term sustainability of Tongaat, and a key element of this is paying down our debt as quickly as possible. Our agreement is to reduce debt by R8.1 billion by March 2021 and we have already met and exceeded the first debt repayment milestone agreed with our lenders.

“We have said for some time that we would consider a number of opportunities to reduce our debt and stabilise the business, including the sale of both core and non-core assets. Other debt-reducing activities include accelerating operational efficiencies, and a potential strategic equity capital raising initiative.

“The sale of the Starch business will allow us to make excellent progress on paying down our debt, and that in turn will give us breathing room and free us up to put measures in place to grow the business. The sale positions us for longer-term sustainability and value creation for our shareholders.”

“Debt reduction is an important part of our sustainability strategy, but by no means the only one. We have put in place a number of strategic business partnerships to raise cash and/or step-change the company’s transformation initiatives and build strong partnerships. These include:

• Within our SA farming operations an initiative was launched through which Tongaat is exiting its direct sugarcane farming activities in SA. As part of this initiative, Uzinzo Sugar Farming, a large-scale black-owned sugarcane farming enterprise was created to farm a portion of this land.
• Within our SA milling operations, we are creating an initiative aimed at establishing a well-structured competitive sugar business on the KwaZulu-Natal North Coast that mills, refines and sells sugar and associated products, with equity held by, amongst others, farmers.
• We are re-strategising the property and land business by creating a special purpose vehicle to facilitate diverse investment partnership opportunities and through this, deliver a stable and sustainable long-term earnings platform.
• We officially launched project Kilimanjaro with the Zimbabwe government in November 2019. The project aims to increase productivity of land through the development of 4 000 hectares of new land for sugarcane farming for the benefit of 200 farmers.”

“The company is energised and motivated, with a human capital base that’s fit for purpose. We are well on the road to sustainability,” said Hudson.

Looking to the future, Hudson said: “Tongaat Hulett is considering multiple options in terms of the potential sale of assets, with our main priority being to protect shareholder value while we honour our debt-repayment glide path in a responsible way. Disposals will be considered at the right price and right time. We are focused, but in no hurry.”

Tongaat’s Starch division was established in 1919 and is one of the largest wet millers in sub-Saharan Africa, operating four wet milling plants located at Germiston, Kliprivier and Meyerton in Johannesburg, and Bellville in Cape Town. The mills have a combined total installed capacity to process more than 850 000 tons of maize per annum.

The Starch Business uses non-genetically modified maize, predominantly yellow maize, to manufacture high quality unmodified and modified starch as well as liquid and powdered glucose and agri-products for some of the largest companies in the food, industrial and animal feed sectors in the domestic and international markets.

The Starch Business is one of the largest producers of unmodified and modified starch, and glucose in Sub-Saharan Africa and enjoys a strong market position as the sole manufacturer of starch and glucose in South Africa. It supplies a significant proportion of the local market across a diverse range of industries, including paper manufacturing, alcoholic beverages, prepared foods and other food manufacturing and consumer end markets.

The sale to Barloworld is subject to shareholder approval and other conditions precedent.

SCAM ALERT

Tongaat Hulett is committed to fair and equitable procurement processes and is committed to the elimination of all forms of fraud, collusion and other unethical behaviour that undermine procurement governance.

It has come to our attention that certain businesses have been contacted and requested credit by persons posing as Tongaat Hulett employees, utilising fraudulent Tongaat Hulett Director ID’s and fake Tongaat Hulett CK Documents in their credit application. We wish to notify potential suppliers that all such credit applications coming via email from entities posing as Tongaat Hulett is in fact fraudulent. Valid and bona fide credit applications will only always arise as a consequence of a Tongaat Hulett tender process or engagement and the authenticity can be verified by contacting 032 439 4464 or enquiries.procurement@tongaat.com.

Please be aware that if your business receives such a request from us via mail or is contacted telephonically please send an email to info@tongaat.com or enquiries.procurement@tongaat.com. Also any form of communication from us via email will only be sent from a “@tongaat.com” email address.

In addition, we encourage you to report fraudulent activity anonymously on our 365/24/7 Free Call Tip-offs Anonymous service – 0800 21 21 87 or tongaat@tip-offs.com.

KEY FINDINGS OF PWC INVESTIGATION

TONGAAT HULETT CONTRIBUTING TO THE TRANSFORMATION OF THE SUGAR INDUSTRY

Tongaat Hulett is advancing the establishment of a transformative milling, refining and sugar marketing business which aims to offer small-scale growers, commercial growers; and equity partners an opportunity to partner in a well-structured, sustainable and competitive sugar business spanning the North Coast of KwaZulu-Natal. 

Strategic assets owned by Tongaat Hulett’s South African sugar operations will form the initial assets in this business. These assets include the four Tongaat Hulett owned mills, Tongaat Hulett’s stand-alone Refinery as well as its animal feeds business, Voermol.  The entity will also become the producer of sugar related products, including its speciality sugars, syrups and liquids.

The shareholding will specifically be aimed at inclusively integrating all the company’s current sugar value chain participants, including supplying growers. The shareholder mix will accordingly target black ownership of greater than 50%, towards which Tongaat Hulett will contribute via its current B-BBEE ownership at a group level.

The worlds’ demand for sugarcane is increasingly shifting from sugar consumption to the growing relevance of the high-margin green economy. The company has identified opportunities in bioplastics, ethanol and additional co-generation. The key benefits of these opportunities include margin expansion, lower carbon footprint and high and growing demand for renewable products globally.

The initiative was launched recently by the Tongaat Hulett CEO, Gavin Hudson, supported by the Transaction Advisors, Capricorn Capital and BSM, and a significant number of growers attended the two launch events.

“The milling, refining and sugar marketing business will be implemented on a scale that has never been achieved in the sugar industry”, said Hudson. “For many years, growers have called for equity participation in the milling and refining business which would allow for their increased participation in the sugar industry value chain. The initiative is providing this opportunity, which is revolutionary for the industry.” It is envisaged that the transaction will be completed by December 2019 and Hudson concluded that this transaction will allow the company to further embed its objectives of transformation, empowerment, inclusivity and partnership.  

Grower representatives welcomed the initiative, particularly its inclusivity and they have requested that Tongaat Hulett assist them in identifying potential funders and ensure that women and youth were prioritised in the process.

“This is a great initiative that promotes empowerment and transformation in the milling sector. It will afford growers the opportunity to participate in the full sugarcane agriculture value chain.  Growers will engage further with Tongaat Hulett to explore the detail of the concept”, noted Dave Littley, Amatikulu Local Grower Council Chairman.

“A key focus area for SAFDA is to ensure full value chain participation of black farmers. We believe any opportunity that aligns with this must unlock value creation for our farmers and contribute to the sustainability of the industry at large – particularly at this time when the industry is facing a number of challenges,” commented Lee Hlubi, Deputy Chairperson of SAFDA.