THE BRINDISI RUN – ONE MILLION TONS AND COUNTING

Tuesday, 29 September 2015
Illovo Sugar Ltd

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BULK RAW SUGAR EXPORTS TO THE EU SUGAR REFINERY BRINDISI

DURING the period 2007/2008, the Illovo Group was actively involved in the negotiations between the ACP (African/Caribbean/Pacific) countries and the EU (European Union) Commission regarding the changes to the EU Sugar Regime that were pending implementation on 1 October 2009.

THE Katherine at anchor.

Arising from the changes to the EU Sugar Regime, a number of the ACP countries gained duty free, quota free access for their sugar exports into the EU. It was at this time that the Illovo Group formed Mitra Sugar and a joint contract was signed for the supply of
1 200 000 metric tons of bulk raws sugar to ED&F Man Sugar & Sfir, who in turn were shareholders in the new sugar refinery (Sugar Refinery Brindisi – SRB) which had recently been commissioned in Brindisi, Italy.

The contract to supply the 1 200 000 metric tons was for the period 1 October 2009 to 30 September 2015, i.e. a period of six years.

Illovo Sugar recently reached the impressive milestone of having shipped the millionth metric ton of bulk raw sugar against the aforementioned contract when the vessel, mv Katherine, sailed from Durban with 25 046 metric tons of Zambian Sugar on board. The vessel sailed from Durban on 21 April 2015 and after 26 days of sailing arrived in Brindisi on 18 May 2015 to commence discharge.

A few additional interesting statistics associated with the bulk raws sugar contract are listed below:

  • 47 vessels have carried sugar to Brindisi to date with the average cargo ranging between 20 000 metric tons and 25 000 metric tons. The single largest vessel carried a cargo of 34 000 metric tons.
  • The sugar has been shipped from the following origins: Zambia (416 000mt), Swaziland 261 000mt), Mozambique (202 000mt), Malawi (125 000mt) and
    Tanzania (15 000mt) and from the ports of: Dar es Salaam, Nacala, Beira, Maputo and Durban.
  • The cost of chartering a vessel to move the aforementioned size cargoes is of the order of $1 million for the 22 to 28 day voyage and the average value of the cargo on board, based on the EU Commission base price for ACP sugar, is approximately €8 750 000.
  • The balance of the contracted cargo is planned to be shipped in the remaining four vessels planned for later this year.
  • One million tons of sugar is equivalent to twice the capacity of the Durban Sugar Terminal.

With the above contract due to be completed this year, Illovo Sugar is currently assessing opportunities for the supply of bulk raw sugar to various EU refineries.

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