News

6 July 2016

President Edgar Lungu officially opens Zambia Sugar expansion

In a long line of continued major investments to expand Zambia Sugar’s production capacity, the Product Alignment and Refinery Project (PAAR) was officially commissioned by His Excellency, the President of the Republic of Zambia, Mr Edgar Chagwa Lungu, at the Mazabuka-based Nakambala factory today. At the public launch in February 2015 we committed to completing the work by May 2016 – we have stood by our commitment and are delighted to commission on time and within the original $80 million budget. 

The fully-functional plant now triggers a series of tangible benefits, including increased cane revenues for Manyonyo and Maggobo smallholder cane growers, who will supply the additional cane demanded by the Nakambala factory.

The project scope included the construction of a modern, high-specification refinery to more than double current annual refined sugar production capacity to around 100,000 tonnes and increase annual sugar production capacity from 420,000 to 450,000 tonnes through a range of smaller factory improvements. This project consolidates Zambia Sugar’s position as Africa's single-biggest cane sugar producer and is an investment for the future, underlining the company’s strategy of focusing on growth within its domestic and regional markets, and downstream opportunities to diversify our product mix.

The increased cane supply required by the expanded Nakambala factory will come primarily from the smallholder developments at Manyonyo and Maggobo, involving more than 150 individual growers. The PAAR project benefits these local communities in terms of both revenues derived from the supply of cane to the factory and, as part of a broader multiplier effect, brings employment opportunities for seasonal agricultural workers and other job creation prospects.

Speaking at the ceremony, the Group Managing Director of Illovo Sugar Limited, Zambia Sugar’s holding company, said that the investment was taking place at a time when the world economy had recorded significant reductions in growth. “This has impacted the Zambian economy and consequently, the current economic environment is characterised by high interest rates and rising inflation. We recognise your government’s efforts in attempting to manage the economic fundamentals and to stabilise the exchange rate. For our part, the PAAR Project speaks to the long term confidence that Zambia Sugar, supported by Illovo, has in the Zambian government, its economy and its people,” said Mr Dalgleish.

It is important to note that the US$60 million syndicated financing agreement for the refinery project was sourced locally with Barclays Bank and Stanbic Bank appointed as the Mandated Lead Arrangers (MLA), while Citibank and the Zambia National Commercial Bank were incorporated as financing partners. The total cost of the project amounted to more than ZMW635 million (US$ 80 million), with the balance of funding sourced from Zambia Sugar’s own available cash resources. Mr Dalgleish said: “May I take this opportunity of thanking these banking institutions who enabled us to finance the project locally within Zambia’s borders, thereby underlining the country’s continuing Zambia’s growth potential.”

During the construction period of the project, Zambia Sugar also provided local jobs, supported local businesses and provided the opportunity for some of the company’s local Zambian employees to further their skills in promotion-related openings.

“Mr President, at this point I would like to thank you and the government ministries and departments under your leadership for their support in principle, and for their practical assistance during the course of the project execution – I refer to the ministries of Commerce, Trade and Industry; Finance, and Home Affairs (immigration), among others, together with the health and safety authorities,” said Mr Dalgleish.

Through the “cane to crystal” journey, Zambia Sugar continues to add value to the economy of Zambia by creating and sustaining employment opportunities, both directly and indirectly through downstream and upstream value chains. The company supported an estimated 3,390 people through the out-growers programme, and indirect and induced employment opportunities of between 1,881 and 8,087 people in the value chain. Zambia Sugar estimated that the total operation supports between 11,285 and 17,491 jobs for every one direct employee of Zambia Sugar, and its value chains provided business to cane growers, cane haulers and contractors, among many others. Click here for a fact sheet: Zambia Sugar's socio-economic benefit to the Zambian nation. 

Mr Dalgleish added that the key driver for this investment was the strong historical and forecast domestic refined sugar sales growth, which was primarily driven by demand from domestic and regional industrial manufacturers.  The project also brought with it a unique opportunity to align Zambia Sugar’s manufacturing assets behind a new post-EU export sales mix and higher food safety standards. This strategy would ensure that both direct consumers and industrial customers of the range of Whitespoon branded products would continue to receive the sugar and syrup products which they liked best, at the exacting quality standards they demanded.

Project stats and facts:

• Total number of consignments (30 tonne truck loads) travelling to site: 330 loads
• 1,200 tonnes of structural steel were erected
• 3,400m³ of was concrete poured
• 1.6 kilometres of piles were installed
• Total number of people housed in the contractors’ camp: 426 people, 3 meals a day, laundry, etc.
• Maximum number of project people on site: 1,028 people

Safety-related performance

• Man hours worked without a disabling injury incident = 1,852,462 hours to date;
• Disabling Injury Frequency Rate (DIFR) = 0.10 against a set target of 0.25 to date;
• Last Recorded Disabling Injury Incident was in June 2015;
• Barring any disabling injury incident by the end of June 2016, the 12 monthly-cumulative (July 2015 – June 2016) DIFR will be zero