• BEE NEWS

Tongaat Hulett to close Darnall Mill leaving hundreds jobless

NORTHCOAST COURIER / 12 FEBRUARY 2020 - 14.09 / STAFF REPORTER

Established in 1846, Darnall sugar mill has provided work and operated as a staple in the small sugar farming community for more than 100 years.

The looming closure of Tongaat Hulett’s sugar mill in Darnall will cost the jobs of nearly 400 workers in a sector that has shifted from growth to survival mode over the past few years.

Darnall Sugar mill will be mothballed for the immediate future.

Last week the embattled group started consulting with the mill’s 390 permanent employees and their representative unions regarding its intention to shut down its milling operation as part of a broader turn-around plan.

This follows in the wake of accounting irregularities that saw billions wiped off the company’s equity and share price last year.

Established in 1846, Darnall sugar mill has provided work and operated as a staple in the small sugar farming community for more than 100 years.

Small-scale farmers, who are already struggling to stay afloat, face an even bleaker future as challenges in the industry deepen.

The SA Farmers Development Association (Safda) said there had been a significant decline in the number of small-scale sugarcane farmers – from around 50 000 in the early 2000s to below 20 000 today.

According to Safda an estimated 200 small-scale sugarcane growers who rely on the milling firm for their livelihoods will be affected by the closure.

In a region with skyrocketing unemployment rates, cane work is an important source of income, particularly for rural households.

These small towns depend heavily on income from the sugar mill.

Darnall Mill was one of Tongaat Hulett’s four mills on the North Coast.

The mills operate for about 36 weeks of the year between April and December.

Tongaat Hullet Sugar Operation MD Simon Harvey said the cane transported and crushed at Darnall will now be diverted to Tongaat’s other two mills – Amatikulu and Maidstone.

The fourth mill is at Felixton.

“To secure the long-term sustainability of the company, Tongaat Hulett is focused on driving efficiencies and reducing costs to enable us to deliver on our goal to become a low-cost producer.

“Within the SA sugar business our four mills run under their installed capacity. The fixed costs of producing sugar make up around 85 percent of our total costs in the sugar business.

“The removal of additional fixed costs will help us make strides towards lower production costs in our sugar business. While no long-term decision has been made on Darnall sugar mill, it will be mothballed for the immediate future.

“While this was not an easy decision, it is critical that we do everything we can to ensure the long-term sustainability of our sugar business in SA,” said Harvey.

While the millers have agreed to cover transport costs for the diversion, a third generation small-scale farmer who requested anonymity said transporting the cane to the other mills will entail logistical issues which will result in harvest-to-crush delays.

“The longer delay will cause the cane quality to deteriorate, decreasing the relative value which means less money in the farmer’s pocket. Mill breakdowns plus logistical delays are of a concern now,” he said.

Industry insiders have predicted that sugar demand will continue to fall as drinks bottlers reformulate their products further to avoid the sugar tax, which is aimed at tackling obesity and diabetes.

Together with cheap imports these pressures are likely to cause further job losses and cause small-scale farmers to exit sugarcane farming.

-----

LINK : https://northcoastcourier.co.za/148759/tongaat-hulett-close-darnall-mill-leaving-hundreds-jobless/

Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER

6 views

© 2019 BEE Chamber (PTY) Ltd, All Rights Reserved