sarafrica corporation says production of granulated white sugar at its refining plant, Goldstar Sugars, were 0,4 percent lower in the quarter to December 31, 2022 due to power and steam supply constraints.
Goldstar, the country’s largest white sugar producer, however, has since temporarily closed its refinery and sent employees on indefinite leave owing to a rise in raw sugar prices by the supplier, a situation that made it difficult to continue operations.
Aldo Musemburi, the company’s secretary said the constraints were the main causes of the marginally reduced throughput, as they negatively impacted plant uptime.
“Consequently, the reduced production led to a 0,2 percent decrease in sales volumes, compared to prior year,” he said in a trading update for the quarter ended December 31, 2022.
Musemburi said prior to suspending the refinery operations, the business was already operating under untenable trading conditions that the supplier had imposed.
“The sole supplier of raw sugar increased its prices significantly, resulting in the company’s products being uncompetitive.
“The company has engaged the supplier and the Ministry of Industry and Commerce, with a view to agreeing to a price, as well as trading conditions that are viable and sustainable,” he said.
During the quarter under review, Musemburi said the unit completed an overhaul programme of two of its five boilers.
“In addition, the business installed an 11kVA dedicated electricity line, procured a 1 000kVA generator for controlled plant stoppages, following power cuts and electrical cables to mitigate power supply challenges,” he said.
The group’s other unit, Country Choice Foods, commissioned an automatic syrup filling machine, deployed a more robust competitive pricing strategy, and introduced new product lines, including
caramel popcorn, baking and cocoa powders.
Musemburi said the initiatives positioned the unit’s products among the most affordable in the market, resulting in notable increases in production and sales volumes of 16 percent and 8 percent, respectively, compared to prior year.
He said from October to December 2022, the local currency depreciated by 10 percent against the United States Dollar on the Reserve Bank of Zimbabwe (RBZ) Foreign Exchange Auction Trading System.
Musemburi said currency volatility has resulted in increased operational costs for businesses and reduced consumer spending.
Players in the sugar industry sector believe the Government’s suspension of import duty through Statutory Instrument 98 on 16 basic commodities including sugar resulted in declining sugar industry domestic market sales.
The Government in May last year suspended import duty on specified basic commodities to cushion citizens against the obtaining price hikes on local goods.
Apart from sugar, other products with suspended import duty are rice, flour, cooking oil, margarine, salt, and maize meal.
The other goods include milk powder, infant milk formula, tea, petroleum jelly, toothpaste, bath soap, laundry bars, and washing powder. At the time, the Government said it was allowing citizens with access to foreign currency to import cheaper basic commodities for their own use in view of substantial increases in prices of locally manufactured products.