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Johannesburg - Some 5 000 sugar workers will embark on a strike for higher wages on Tuesday, Tongaat Hulett Limited [JSE:TON] said.
"Wage negotiations... have reached a deadlock," spokesperson Michelle Jean-Louis said in an e-mail to Sapa on Monday.
"In terms of the negotiation process, an official strike notice was issued on 23 May. Having served this notice, employees are entitled to embark on a protected strike with effect from Tuesday 27 May."
Employees from Tongaat Hulett and Illovo Sugar [JSE:ILV] are demanding a 10.5% wage increase, while the employers' final offer stands at 8.5%.
"Union representatives and sugar industry management are in meetings today [Monday] as the process of finding a satisfactory outcome for all stakeholders involved continues," said Jean-Louis.
No further details were provided.
On Monday, Tongaat Hulett also released its results for the financial year end.
In the report, CEO Peter Staude said total sugar production grew by 170 000 tons to
1,424 million tons, compared to the low point of 1,006 million tons in 2010/11.
South Africa produced 634 000 tons, Mozambique 249 000 tons, Swaziland 53 000 tons of raw sugar equivalent, and Zimbabwe produced 488 000 tons of sugar.
He said the South African sugar operations, including agriculture, milling, refining, and various downstream activities recorded an operating profit of R340m.
"The benefit of substantial growth in sugar production was partially offset by the pressure on revenue of lower local market volumes and net prices as a result of import competition, lower export prices, and the reduced benefit of cane valuations compared to the prior year," said Staude in the report on its website.
"The past year has seen considerable increases in wage rates, particularly at the lower levels where the majority of man-hours are worked, as well as price increases for bought-in goods and services."
He said there was also significant success in reducing the cost of sugar production in respect of goods, services, transport, marketing, salaries, and wages.
"The unit cost of production in South Africa reflected the benefit of volume growth with limited cost increases."
Staude said earnings were expected to increase in the year ahead, driven by continuing growth in operating profit and cash flow.
"Sugar prices are expected to stabilise... Better import protection should lead to lower exports being necessary.
"The sustainable cost reductions of the past year provide a good base for the next steps in the ongoing cost reduction process... as milling costs and many of the agricultural costs per hectare are mostly fixed."
He said Tongaat Hulett was in a fortunate position of having more than 700 000 tons per annum of existing unutilised sugar milling capacity (a R13bn replacement value).
He said sugar production is expected to increase from 1,424 million tons in the past year to more than 1,800 million tons over the next four years, with the focus on increasing cane supplies continuing.
