Home » Business » Starafrica to Reduce Process Losses

Starafrica corporation expects to reduce process losses to below 4 percent from an average of 13 percent after completion of its sugar refinery plant. The plant is in the final phase of commissioning after a $7 million upgrade funded by major shareholder, the National Social Security Authority. Deputy general manager Mr Rod Nazare said during a media and analyst tour of the plant that the upgrade would cut process losses below 4 percent.

“It will cut processes to less than 4 percent, previously losses were as high as 13 percent,” he said.

The losses were also partly due to the raw sugar quality, which reduced the final sugar output.

The old and inefficient refinery plant was the major reason why starafricacorporation has over the past few years been recording perennial losses.

The group posted a $12 million loss from continuing operations in the year to March 2014 after an eight months shutdown to allow for plant upgrade.

Chief executive Dr Sam Mushiri, in a trade update after the company’s annual general meeting, said the upgraded refinery plant would cut coal consumption from 35 percent to 20 percent. It will also significantly reduce water consumption.

He said the final batch of engineers from India were already in the country for the final phase of commissioning of the plant, that will be done over a period of 21 days.

starafrica expects that after full commissioning, the plant would be able to meet expectations of all customers, including commercial consumers who account for 60 percent of its refined sugar sales.

“These parameters include the colour of the sugar, which is less than that specified by our most demanding customers, the bottlers,” Dr Mushiri said. The next three months will indicate the volumes the group would be able to sell after the plant upgrade.”By this time we will be able to confirm that the plant operates to parameters we contracted for,” he said.

The group successfully negotiated raw sugar supply contract with Zimbabwe Sugar Sales, and would sell to starafrica at ex-works price of $510 per tonne.

Dr Mushiri said the price of raw sugar from ZSS meant the margin of profit would be small.

The group will lobby Government to increase sugar import tariffs to do away with unfair external competition to curtail dumping of sugar on the market. Following the scheme of arrangement that gave six months moratorium on repayment of liabilities to creditors, starafrica said it was in default on some of its obligations to creditors after failing to dispose some of its non-core assets.

It could not sell its 33 percent stake in Tongaat Huletts Botswana as well as its stake in Bluestar Logistics due to the tight liquidity in the economy.

Dr Mushiri said the group would engage the creditors to address the balance sheet.

“We defaulted because we could not sell our one third shareholding in Tongaat Huletts Botswana and our transport business. We will engage the creditors to try and find a way to pay them.

“But any sensible person would see that we there is a business now after completion of the plant upgrade, so we will be able to pay them,” he said.

Source : The Herald

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