Tongaat Hulett Ltd., South Africa’s second-biggest sugar company, is planting more cane to increase production after a drought slashed its output in the country by more than 18 percent.
Sugar production in Africa’s biggest economy dropped more than 100,000 metric tons from 564,000 tons in the last season because of a “severe” drought in the east coast region, the Tongaat, South Africa-based company said in a statement today. It is planting 6,000 hectares (14,800 acres) of cane to supply sugar production plants in the country, the company said.
Production in Zimbabwe may rise as much as 35 percent to 350,000 tons in the 2010-11 season, while Mozambican output may gain as much as 53 percent to 205,000 tons, the company said. Tongaat is raising capacity in countries that qualify for preferential access to the European Union at premium prices, including Zimbabwe and Mozambique.
Profit rose 11 percent to 511 million rand ($73 million) in the half through Sept. 30, from 462 million rand a year earlier, Tongaat said today, adding it is “starting to benefit from the targeted sugar production growth in Mozambique and Zimbabwe.”
Regional sugar prices are beginning to rise in response to higher world prices, the company said in its outlook. Demand for raw-sugar exports to the European market is intensifying, while sugar available for export is “limited,” it said.
Tongaat fell as much as 3.3 percent to 103.50 rand before closing down 0.9 percent at 106 rand by 5 p.m. in Johannesburg.
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