Tongaat Hulett, an agri-processing business operating in southern Africa, reported lower numbers for 2010 that could seep into the region’s biofuel production levels.
The group said that the past year was marred with factors like the severe drought in 2009-2010 in South Africa as well as poor growing conditions in Mozambique in H1 2010. Tongaat Hulett said in a release, “The South African sugar production was the lowest in many decades. Exchange rates have been less favorable than in the prior year. Sugar realizations in the past year in the Mozambique local market and on exports from South Africa were constrained.”
Tongaat Hulett produces biofuels from sugar in Zimbabwe with company CEO Peter Staude saying in 2009, “We believe that in the medium- to long-term, Zimbabwe will be one of the real success stories in African agriculture.” However, profits from the southern African country’s sugar operations dropped R64 million compared to the previous year’s levels.
The decreased levels in sugar cane production in the southern African region could also have an impact on Africa’s largest biofuel markets like Mozambique. Sugar cane’s biomass can be used for electricity generation and fuel ethanol. The company said, “Volumes were lower than expected [in Mozambique] as a result of crop positioning and weather conditions, which led to lower cane yields per hectare harvested and 18% less sugar extracted from the cane than expected, particularly in the latter part of the year.”
Tongaat Hulett Sugar (THS), a division within Tongaat Hulett, is attempting to expand its focus away from a narrow definition of sugar to a broader approach that includes biofuels, but if overall production continues to decline, this dream could still be far away. THS said that future sugar factories could produce direct white sugar, electricity, and fuel alcohol providing the flexibility to switch between these three products according to demands and production levels.
The company was planning to build an ethanol plant in Mozambique although Staude said the construction of the project would depend on whether the company could benefit from government reforms in Mozambique and South Africa to stimulate biofuel investment.
The company still maintains, “Renewable energy, both electricity generation and ethanol production from sugar cane, provides substantial future opportunities.”
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