VENTURES AFRICA- For reasons of funding difficulties and political risks, South Africa based-company; Illovo Sugar has withdrawn from the 2.6 billion rand ($310 million) sugar project in Mali.
The project, Markala Sugar project, was a proposed private-public partnership between the Mali government and Illovo Sugar. It was expected to produce 1.5 million tonnes of cane per year.
Illovo Sugar Managing Director, Graham Clark, said, the company stopped negotiation after the government failed to finalise funding and complete undertakings with regard to infrastructure development.
Illovo is Africa’s biggest sugar producer with operations in South Africa, Malawi, Mozambique, Swaziland, Tanzania and Zambia.
With the company now extending its interests to other Africa country, Graham told Reuters that Illovo will channel its interest to countries in the East and central Africa.
“On the African landscape, West Africa has … increased in risk profile and therefore other regions, such as east Africa and central Africa would come to the fore once again. We are focusing across the region. Those would be areas where you have the best fundamentals to grow cane and attractive markets” Clark said.
However, the decision to pull-out of the Mali sugar project did not deter the profit of the company as it recorded a 31 percent increase in operating profit for the year to March. The company’s profit increase resulted from a strong commercial performance despite lower production levels.
Clark however stated that the European Union market remains significant to the company as it allows for duty and quota-free exports for producers in developing countries.
“Europe will stay a much higher priority for us compared to the world market, which tends to be pretty volatile,” he said.
At the end of March, Illovo’s sugar exports into Europe topped 400,000 tonnes.