The Gleaner | July 14, 2010
A SWEET $11-billion boost is in the offing for the local sugar industry, which could see local farmers receiving Chinese support as they seek to maximise their output.
Agriculture Minister Dr Christopher Tufton told Parliament yesterday that Cabinet has approved the recommendations of the Sugar Company of Jamaica Holdings for Chinese firm, COMPLANT International Sugar Industry Company Limited, to purchase government's remaining sugar assets, including the Frome, Monymusk and Bernard Lodge factories.
"COMPLANT will acquire the three factories and attendant lands for US$9 million, or J$774 million," Tufton told the House of Representatives.
50-year lease
COMPLANT has also agreed to pay approximately $7,500 yearly per acre to lease 44,479 acres [18,000 hectares] of cane land. The lease of these lands will be for 50 years and is renewable for another 25 years.
Governments for years have been attempting to get out of the loss-making sugar business. Despite the sale of the Trelawny estates and St Thomas sugar factories for a total of $180 million, several attempts at divestment of the remaining estates fell through and deadlines which were announced were not met.
Last year, negotiations with Eridania Suisse faltered in an earlier round after the Italian sugar refiner completed its due diligence on the Jamaican assets.
The aborted asset sale to Eridania represented the second of Jamaica's failed attempts in two years to sell the three factories, following an episode involving ethanol producer, Infinity BioEnergy of Brazil, in 2008. That South American firm was unable to muster the US$125 million cash agreed for the sale of the sugar assets.
Yesterday, Tufton told Parliament that the proposed sale was the best the Government could get.
"I think, under the circumstances, collecting just under J$900 million for an estate that was three years ago costing the government $5 billion is not a bad deal," Tufton said.
Roger Clarke, Opposition spokesman on agriculture, said it was good that Jamaica was getting out of sugar. He, however, bemoaned the fact that the proposed agreement had not taken into consideration the cost of canes and cane roots in the fields.
"We have no disagreement in the divestment because we started the process," declared Clarke, who was agriculture minister during the last People's National Party administration. "The Government cannot run a sugar estate."
Tufton said COMPLANT would develop the assets in two phases, the first of which involves the spending of $11 billion to rehabilitate fields, as well as repair the factories at Frome and Monymusk.
COMPLANT might also build a sugar factory, but this is contingent on a feasibility study, Tufton said.
"If the feasibility studies are favourable, then COMPLANT will invest US$180 million, or J$15.5 billion, to construct the refinery," he announced.
The minister said COMPLANT has also proposed to acquire additional lands for cane expansion in order to increase throughput to the factories.
"In tandem with this, they propose to work closely with local cane farmers, providing them with the necessary support to increase production and productivity, and ensure continued supplies to their factories," he said.
Meanwhile, the minister said the Chinese firm also plans to use cassava to produce ethanol in Jamaica.
"COMPLANT is associated with a state-of-the-art cassava-based ethanol facility in Southern China, for which China has secured a number of patents," he said. "They also operate similar plants in some 12 countries in Africa. This aspect of the plan will open up possibilities for the expansion of commercial cassava production in Jamaica by our farmers on substantial areas of non-sugar lands, including mined-out bauxite lands."
See also: Doing it the rice way
