Tongaat sees higher Zimbabwe sugar output in 2024

Tongaat's estates in Zimbabwe (picture: Scott Photography)

Zimbabwe’s largest sugar producer expects the industry to see a slight increase in output this year, bouncing back from a previous season hit by equipment breakdowns and low prices.

The country produced around 370 000 tonnes last year, after production was slowed down by mill breakdowns at Tongaat Hulett’s Triangle and Hippo Valley, which produces over half of Zimbabwe’s sugar. Foreign currency shortages made it hard for the companies to buy spares, while low prices and cheap imports eroded profits across the sector.

Tongaat Zim CEO Tendai Masawi says he expects more sugar this year as mills come back to full production.

“There was some carry-over cane from last year because we faced recurrent mill breakdowns, but I am happy that we managed to repair our mills and right now they are in good condition,’’ Masawi says. “This year we expect to produce between 395,000 and 400,000 tonnes of sugar. Our two mills (Triangle and Hippo Valley) together will crush about 1.6 million tonnes of cane each.’’

The two mills have a combined capacity to produce 640,000 tonnes of sugar per year.

“I’m very confident that we will achieve the tonnage we set,” Masawi says. The expected output, at current prices, will earn US$385 million in revenue, from US$366 million last year.

Sugar producers have suffered from cheaper imports, which land cheaper in Zimbabwe because of lower production costs. According to Masawi, the main cost drivers are power for irrigation and fertilisers, whose cost has soared globally over the past two years. Even with low international prices, producers were forced to export sugar to earn forex for retooling. The company needs up to US$20 million for spares this year.

“We were forced to export some of our sugar at lower prices, compared to local prices, because we wanted to raise foreign currency. Our mills require spare parts that are imported and we have to export to get that foreign currency,” he says. Tongaat expects to export 96,000 tonnes this year.

Local sugar also has to comply with regulations to fortify product, adding extra costs. High costs of production, especially inputs such as fertilisers and power for irrigation means locally-made sugar is more expensive.

The company estimates that Zimbabweans consume an average of 24kg of sugar per year, above the African average of 17.2kg. It sees demand for table sugar rising 9.9% by 2028.

The company buys 40% of its cane from 1,200 contracted outgrowers. Tongaat hopes to expand this with the Kilimanjaro project, a partnership with government that is meant to open up more land to farmers.

On future projects, Tongaat plans to set up a carbon dioxide plant. The gas, a byproduct of production, would be sold to beverage producers. On energy, the company also plans a solar farm and to upgrade its ethanol plant. Tongaat is also looking to commercially make stockfeed from byproducts.

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