Limphasa to invest $40 m in sugar production

Nkhata Bay-based Limphasa Sugar Corporation Limited says it plans to invest a further $40 million (about K7 billion) at its sugar plantations between now and mid 2013.

The company’s spokesperson Kirit Thakrar disclosed this in an e-mail interview on the project’s progress.

The project is poised to emerge as Malawi’s second biggest sugar production investment after Illovo Sugar (Malawi) Limited.

The project, started in 2008, has been expanding its sugarcane fields in Limphasa Valley from three hectares in 2008 to about 600 hectares in 2012.

“In the next two years, it is planned to cover 1 500 hectares. We plan to have about 5 000 hectares for our full production,” said Thakrar.

He disclosed that at the moment, there is an emphasis on promoting smallholder farmers as well as outgrowers to plant sugarcane for sale to the new company’s mill.

Thakrar also said his company has facilitated the establishment of the Nkhata Bay Cane Growers Trust which, he said, will enable establishment of a further 2 000 hectares for this purpose.

He added that discussions are at an advanced stage with two banks for the provision of a microfinance facility to smallholder farmers.

He said the company, which has 160 workers, plans to go full throttle in 2013 when the new ultra-modern factory with an initial production capacity of 90 000 tonnes of raw sugar will be commissioned.

Illovo, Malawi’s largest sugar producer, produced 282 000 tonnes last year.

“The company has since interviewed seven potential local contractors to carry out the civil works. The mechanical, electrical and instrumentation works will be carried out by a turnkey specialist contractor from Pune in India,” said Thakrar.

He also revealed that Limphasa has already found export markets, saying most of the sugar will be exported and earn the country in excess of $50 million (about K8.3 billion) annually.

Thakrar also said at the moment, several off-takers from Europe have visited the project site and are ready to purchase all the sugar.

“This country has huge potential in agriculture and I think five or six plantations like these could help Malawi generate significant amounts of foreign exchange, a commodity which is currently scarce,” he added.

The company plans to package its sugar in one tonne bags for exports to the international market, whereas 25kg and 50kg bags will be sold to the regional markets.

According to Thakrar, the new sugar factory will have its own water treatment and electrical power production facilities of five megawatts.

He added that is subject to agreement with government agencies and the Malawi Energy Regulatory Authority (Mera), the power production facility could be expanded to produce 14 megawatts.

Thakrar also disclosed that the sugar factory will create direct employment for approximately 3 500 people at all levels whereas other jobs will be created indirectly through the new businesses that will spring up to fulfill the supply chains.

Malawi Investment and Trade Centre (Mitc) acting chief executive officer Clement Kumbemba, whose institution is facilitating the flow of investments into the country, among others, described the Limphasa project as critical to Malawi, saying it will generate the much-needed forex.

Said Kumbemba: “Five similar projects of this nature in Malawi could surpass what tobacco is currently generating in the country in terms of forex. As Mitc, we are impressed with what Limphasa is doing because it will help the country realise import substitution.”