AGRIBUSINESS concern Tongaat Hulett has revealed that the government has approved its application for a 99-year lease which will soon be signed, before it is taken to financial institutions for endorsement.
Tongaat, which owns 30 000 hectares of land which are under sugarcane at Hippo Valley and Triangle Estates, formally applied for a 99-year lease for its properties in the Lowveld.
“We are almost there now in getting our 99-year lease signed,” Tongaat Hulett chairperson Canaan Dube revealed at the company’s inaugural meeting with editors in Harare last week.
He said the company was “not quite there yet” to get the banks to appreciate the current 99-year leases, adding that the features of the lease needs to meet certain standards set by the banks.
Dube said once government signs the 99-year lease, the sugar producer is planning to approach the banks on “a one to one basis” and understand what is still required for the leases to be bankable.
He revealed that Tongaat will embark on a US$50 million expansion programme which will result in an additional 3 300 hectares being put under sugarcane.
“Hippo Valley Estates Limited in partnership with its sister company Triangle Limited, has various projects and initiatives it is undertaking. The government and banks are progressing the cane expansion project, Project Kilimanjaro, by developing a further 3 300 hectares to sugarcane in addition to the 700 hectares for the benefit of new indigenous farmers at an estimated cost of US$50 million,” he said.
Dube said the additional 3 300 hectares will benefit 165 farmers when fully developed with 1 500 jobs created as a result.
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“It must be noted that of the 3 300 additional hectares, 1 931 hectares have already been cleared,’’ he revealed.
Tongaat Hulett chief executive officer Aiden Mhere revealed that the company was looking to double its ethanol production in the short to medium term.
“We are looking to double up on ethanol production. The infrastructure is already there. All we need to do is to add more capacity so we are intending to double up to more than 80 million litres in the short to medium term and that will bring quite a sizable contribution to the economy,” he said.
Mhere said sugar sales earned approximately US$353 million, with 20% being retained by the Reserve Bank of Zimbabwe.
He said government’s move not to renew the free import duty on commodities will be a boost to the operations of the company which had been adversely affected by the proliferation of sugar imports into the country.
The Tongaat Hulett boss said the company was looking at options to export to China after receiving numerous inquiries. Mhere pointed out that the steep shipping costs were a hindrance to exporting to China, but said that as its capacity utilisation increases from the current 75% to 100%, it could be a possibility as the cost will come down.
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