Tongaat has substantial excess milling capacity. Its sugar output is expected to be about 1.5m tons in the financial year to March, while it has milling capacity for about 2.1m tons.
In its South African operations, Tongaat has four mills and one refinery in KwaZulu-Natal.
On 27 May, thousands of workers at sugar plants embarked on a strike, demanding an 11% pay increase as well as housing allowances and a reduced working week. Contract workers wanted permanent posts.
While a deal was struck and most workers returned to work on 9 June, those at the Clairwood refinery rejected the deal and refused to return to work.
Tongaat spokesman Nkonzo Mhlongo said employees at all of the company's operations had since returned to work. This included employees from the Tongaat Hulett sugar refinery business unit who participated in an unprotected strike for a further two weeks.
Tongaat produced 1.42m tons of sugar in its year ended March this year. The company values its 700,000-ton-a-year of unutilised sugar milling capacity at a replacement value of R13bn.
The company expects to increase sugar production by about 100,000 tons a year, which means it will still have excess milling capacity for some time to come.
Tongaat's chief executive Peter Staude said that the company would need to invest in new milling capacity in about seven years' time.
Source: Business Day via I-Net Bridge
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