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Johannesburg - South African group Illovo Sugar [JSE:ILV]
has pulled out of a R2.6bn sugar project in Mali, largely due to political risk
and also funding difficulties, and will focus on growth opportunities elsewhere
in Africa.
"On the African landscape, west Africa has ...
increased in risk profile and therefore other regions, such as east Africa and
central Africa, would come to the fore once again," managing director
Graham Clark told Reuters on Monday.
"We are focusing across the region. Those would be
areas where you have the best fundamentals to grow cane and attractive
markets," he said.
Mali's Markala Sugar project, a proposed private-public
partnership between the government and Illovo, was expected to produce 1.5
million tonnes of cane per year.
Illovo ended its interest in the project after the
government failed to finalise funding and complete undertakings with regard to
infrastructure development, Clark said, adding security risk was also a concern
after a coup.
Illovo, a unit of Associated British Foods and Africa's
biggest sugar producer, has operations in South Africa, Malawi, Mozambique,
Swaziland, Tanzania and Zambia.
Clark said the European Union market, which allows for duty
and quota-free exports for producers in developing countries, remained
significant for the company. "Europe will stay a much higher priority for
us compared to the world market, which tends to be pretty volatile."
Illovo's sugar exports into Europe topped 400,000 tonnes in
the year to end-March, and Clark said he expected a slight increase in 2012/13.
The company said diluted headline earnings per share for
2011/12 the year to the end of March rose 18% to 132.5 cents. Headline earnings
are the main profit gauge in South Africa and exclude certain one-off and non
trading items.
Sugar production fell 7% to 1.526 million tonnes due to the
impact of a second year of drought.
Illovo shares were up 0.6% at 12:50 GMT.
Also on Monday, Illovo rival Tongaat Hulett [JSE:TON] reported an 11% rise in full-year earnings, boosted by an increase in sugar output and prices.
