Chronicle Editor
Oliver Kazunga, Senior Business Reporter
GOVERNMENT has renewed Tongaat Hulett’s sugar milling licence for another 20 years to December 2040 and the company has been assured of a 99-year lease grant on 23 979 hectares.
In a statement accompanying the firm’s annual report for the year ended 31 March 2021, the agro-industrial firm said: “The Government has since assured the company that it will be granted security of tenure by way of a 99-year lease on Hippo Valley North (23 979ha), while maintaining freehold title on Hippo Valley South (16 433ha).
“The company has also had its sugar milling license renewed for another 20-year period ending December 2040.”
Tongaat said the positive Government response provides further confidence and stability to its operations.
Regarding work on the 4 000ha cane development project (Kilimanjaro) it is undertaking in partnership with the Government and local banks, a total of 2 700ha of virgin land have been bush-cleared and ripped, and 562ha planted.
Project works were slowed down on account of delays in obtaining the requisite funding from financial institutions pending conclusion on the land tenure issue.
“To ensure productive use of the cleared land in the interim, 76ha and 750ha were put to maize and sorghum respectively, and an additional 902ha of maize was planted on company fallow cane land as a break crop,” said Tongaat.
“The company is committed to continue partnering with Government in food security initiatives on an annual basis.”
Over and above the on-going inputs and extension support to private farmers, the firm has initiated various vertical and horizontal sugarcane growth programmes over the past financial year. A partnership framework whereby Tongaat Hulett is co-managing certain underperforming out-grower farms is progressing satisfactorily.
The company is also providing financial and technical assistance to a number of new sugar cane out-grower development projects with work on “Pezulu” project measuring 1 168ha having started.
Other growth projects, with potential for an additional 11 000ha for the benefit of out-growers are under consideration over the next five years.
During the financial year under review, revenue increased by 34 percent to ZWL$16,8 billion (2020: ZWL$12,5 billion), largely due to increased export volumes.
Industry export sales for the year recorded a 29 percent growth to 115 000 tonnes (2020: 89 000 tonnes) driven largely by a growth in the Kenya market.
Operating profit and profit for the year decreased by 28 percent to ZWL$3,8 billion (2020: ZWL$5,3 billion) and by 58 percent to ZWL$1,1 billion (ZWL$2,6 billion) respectively, weighed down by a fair value loss on biological assets of ZWL$1,1 billion (2020: gain of ZWL$1,7 billion).
This was due to a drop in forecast cane price at current purchasing power from prior year. Capital expenditure totalled ZWL$365 million (2020: ZWL$159 million) of which ZWL$225 million (2020: ZWL$135 million) was invested in replanting cane roots.
Going forward, the manufacturing concern said total production for the sugar industry for the forthcoming 2021/22 production season is expected to increase marginally on the back of projected improvements in yields, cane quality and milling efficiencies.
“In the medium to long-term, the company is considering various diversification initiatives in order to increase the contribution of its non-sugar business,” said Tongaat.-@okazunga
Online Reporter