Sugar deal sours
Published:Tuesday | August 2, 2011 | 12:00 AM
- December crop under threat as Chinese firm grows wary
Mark Titus, Staff Reporter
WESTERN Bureau:
Almost a year after signing a deal with the Government of Jamaica (GOJ) to acquire Frome, Monymusk and Bernard Lodge sugar estates, Chinese firm COMPLANT International Sugar Industry Company Limited are reportedly expressing reservations about the arrangement.
According to chairman of the Westmoreland and Hanover Cane Growers association, Cleveland Keddo, the Chinese were not informed of all the challenges they will have to face in the sector, and this could threaten a smooth start to the 2011-2012 crop year due for December.
"We met with Francis He in our first meeting at the SIA and he was a bitter Chinese man," Keddo told The Gleaner on Friday. "When we walked in that morning he told us that we can go plant pumpkin and peas, (because) they don't have to buy our cane."
Keddo recalls that, at the June meeting, He, who is the senior administrator at COMPLANT, also, had some "not so pleasant words" for SCJ Holdings, the government entity charged with divestment of the loss-making entities.
Efforts to contact COMPLANT, whose offices are based at Bernard Lodge estate in St Catherine, were unsuccessful, and Hillary Reid of Myers, Fletcher & Gordon, the law firm representing the Chinese,was unavailable when calls were made to her office.
COMPLANT signed a sale and purchase deal worth US$9 million last June which would see the likely construction of a 200,000-tonne sugar refinery and ethanol plant,at a cost of US$221 million, and the ownership of 25-50 acres of the land immediately surrounding each facility.
The Chinese firm also leased some 30,000 hectares of cane lands for US$35 per hectare per annum for a period of 50 years, renewable for another 25 years, and another US$11 billion is set aside for the rehabilitation of the fields.
The new owners did not take immediate control of the facilities but will instead defer this for June 2011 in order for SCJ Holdings, the Government's management firm, to complete a US$26-million current year-supply contract with British sugar refiner, Tate & Lyle.
Aubyn Hill, the chief executive officer (CEO) of SCJ Holdings, in an update on the readiness of entities for handover last week, spoke with The Gleaner about having to extend the crop season at Monymusk in order to fulfil outstanding commitments. However, quizzed as to the reaction of the Chinese on this and how it would affect the handing over, he said there was a mutual understanding between the parties.
Calls to his private phone were unanswered on Monday, and messages left were not responded to.
Neither could Robert Montague, the new minister of agriculture and fisheries be reached.
However, a usually reliable Gleaner source, close to the situation confirmed that the principals of the Chinese government entity believe they were not given an accurate picture of the local industry when the deal was struck and have sought to hire their own evaluator.
The Gleaner understands that the Chinese are also now in possession of a 2005 document which was prepared by a former employee of the Sugar Industry Authority (SIA), which examines the state of the sector, with a five-year plan to make it viable.
Chinese frustrated
"They are very frustrated," the source said. "There seems to be little or no communication between Jamaicans and the Chinese at this time, and every evaluation that they request is being checked for its accuracy."
One specific issue relates to the transportation of the cane to the factories, normally facilitated by the installation of hoists that are strategically placed around the sugar belt to facilitate the collection of cane, which is then transported to the factory.
However, that process might change under Chinese management, leaving the farmers to stand the cost of transportation on their own. This along with other assistance to ensure a seamless through-put at the factories could affect the start of the 2011-2012 crop season.
"We have had two meetings with them since, and although no progress yet, we have to keep trying to set the parameters for the next season, because this is our life," Keddo said. "We will be pushing to have another chat with them very soon."