COMPLANT employs SCJ as agent
Published:Wednesday | January 5, 2011 | 12:00 AM
Sabrina Gordon, Business Reporter
COMPLANT is in possession of Jamaican sugar assets it purchased last year, but has hired the existing Sugar Company of Jamaica (SCJ) Holdings Limited team to run its three factories and estates until the close of the crop year in midsummer.
The transition does not affect contractual arrangements for the sale of sugar supplies that pre-dated the Chinese ownership, said Aubyn Hill, the head of SCJ Holdings.
"The 2010-11 crop is already committed and sold to Tate & Lyle," Hill told Wednesday Business.
"What COMPLANT has engaged us for - effectively acting as their agents - is to prepare the fields for planting, fertilising, herbiciding and those things. So that won't affect our commitments to Tate & Lyle nor any of the other markets that now exist."
COMPLANT International Sugar Industry Company Limited bought the assets of Frome, Bernard Lodge and Monymusk for US$9 million last July.
SCJ Holdings will earn five per cent as agents of COMPLANT, but Hill offered a muddy explanation of how that money is calculated.
"It is not so much about how much we will be earning from this deal," he said.
"We will be agreeing a budget for the various items, and then we (will) charge five per cent on what that budget is," he said.
The state-backed Chinese operation, who signed the sale and purchase deal in the summer, also entered into side agreements for the construction of a 200,000-tonne sugar refinery and ethanol plant at a cost of US$221 million, depending on a feasibility study; and for ownership of 25-50 acres of the land immediately surrounding each sugar facility.
50-year lease
COMPLANT also secured a 50-year lease on some 30,000 hectares of cane lands at US$35 (J$3,010) per hectare per annum, with an option to renew for an additional 25 years.
COMPLANT is paying the US$9 million for the factories according to an undisclosed schedule. Hill did not specify how much has been paid over to date, but said the company was up to date on its obligations.
"They have paid what they are required to pay up to now," he said. "Normally, you pay when all the paperwork is done, but because this is a big project, we agreed to payment by stages."
Quizzed as to what would become of SCJ Holdings after the handover in August, Hill said its role as sugar producer would end.
"SCJ will have a lot of land related activities to do," he said. "SCJ will cease as a sugar producer, and will be a very slimmed-down, land-oriented company."
Jamaica is completing a two-year forward-sale contract to Tate & Lyle, valued at US$46 million.
Last year's crop fell 20,000 tonnes short; and this year's, which began in December, got off to a creaking start, leading to industry concerns that Jamaica may default on its obligations to the United Kingdom refiner.
"It is still early days to even think about such an outcome," said Minister of Agriculture and Fisheries, Dr Christopher Tufton.
"But in a worst-case scenario, we have a pooling system that we can utilise," he said.
Apart from Tate & Lyle, the Government is obligated to supply 11,500 tonnes of sugar to the United States market annually, but has constantly been unable to fulfil a request for additional supply over a number of years.