New deal supplants Tate & Lyle contract
Published:Sunday | July 18, 2010 | 12:00 AM
Mark Titus, Business Reporter
SCJ Holdings, which manages the state-owned sugar estates, will in December start taking off the cane now on the land to meet its US$26 million current year-supply contract with British sugar refiner, Tate & Lyle.
But the additional US$20 million the Government was slated to get from Tate & Lyle for next year's crop will no longer be on the table once a contract is signed with COMPLANT International Sugar Industry Company Limited.
Deadline for new purchases
COMPLANT, which is buying the State's remaining sugar assets - the Frome, Monymusk and Bernard Lodge estates - for US$9 million and which is planning to spend another US$11 billion rehabilitating the cane fields, should have their new purchases in hand by June next year, SCJ Holdings head Aubyn Hill told Sunday Business.
The COMPLANT group, a state-backed operation, has had dealings in Jamaica before as developers of the Trelawny multi-purpose stadium.
The two-year pre-financing deal with the British refiner called for the supply of 100,000 tonnes of sugar annually, in exchange for US$26 million for the 2010-2011 crops, and US$20 million the following year.
But the arrangement had a window for Jamaica opting out of the second-year pact should the factories be sold by then.
"We will not be following through on the second-year arrangement with Tate & Lyle,"
"The agreement with Tate & Lyle is for two years, but it has been agreed that once an agreement is signed with an investor, they (the buyer) will have access but no instruction."
A May or June 2011 date is contemplated for COMPLANT to take over, Hill said.
At that point, they will have "access to the fields, access to the factories, to look around and to make plans going forward, but they can only begin to do things when we take the cane off and close the factories, and the investor understands that as well".
COMPLANT will acquire the three factories and their lands for US$9 million, or J$774 million. The Chinese firm will also lease some 18,000 hectares of cane lands for US$35 (J$3,010) per hectare per annum for a period of 50 years, renewable for another 25 years.
Developing assets
COMPLANT will develop these assets in two phases, starting with a US$126.8 million or J$11 billion immediate injection over three years to rehabilitate fields.
In Phase Two, the company proposes to build, depending on a feasibility study to be ready by next May, a 200,000-tonne sugar refinery to satisfy Caribbean regional demand and possibly Jamaica's European Union supply obligations.
If the feasibility studies are favourable, then COMPLANT will invest US$180 million, or J$15.5 billion, to construct the refinery.
"COMPLANT is coming in to make sugar, but part of what makes the Jamaican deal attractive to an investor is the multiplicity of markets that we afford them," Hill explained.
The Chinese company, under the Economic Partnership Agreement with Europe, can sell its sugar to Tate & Lyle to refine in England, and will have access to the United States and CARICOM's 15 markets, Jamaica included, the SCJ boss said.
"They will start off with brown sugar for the next couple of years until they can put up their refinery," said Hill.
The sale of the last sugar assets won't necessarily spell the end of the road for SCJ Holdings.
"SCJ has a contractual arrangement with Tate & Lyle until next year this time, plus we are among the biggest landlords in Jamaica, which includes all the land leased by the sugar investors," said Hill.
The agriculture ministry, will, also be seeking to provide the long-awaited land titles to sugar workers.
Three other state-owned factories - Duckenfield, Hampden and Long Pond - were sold last year to Jamaican investors.