Durban – The Gledhow Sugar Company in KwaDukuza (Stanger), KwaZulu-Natal, which services more than 245 sugar-cane growers, has been placed in business rescue.
The growers that serve the Gledhow Mill produce more than 1.1 million tons of sugar cane per year and about 6% of the industry’s total output.
The growers also employ more than 3 400 workers from surrounding communities.
This is according to the South Africa Canegrowers (SA Canegrowers) chief executive, Thomas Funke.
He said this announcement is a further signal of the sugar industry’s growing distress and the need for urgent intervention to prevent the crisis from deepening.
“The announcement follows the entry of Tongaat Hulett’s South African operations into business rescue in October 2022. This event caused an acute crisis in the industry, delays in grower payments, and uncertainty as to the future of sugar milling operations on the North Coast of KwaZulu-Natal.
“As the new season commences on April 1, 2023, Gledhow’s supplying growers now face similar uncertainty as to whether the mill will operate normally and whether it will be able to make payment for sugar cane delivered and meet its financial obligations to the industry,” said Funke.
He said the reasons behind the financial challenges at each individual mill are unique to each miller.
“There are also environmental, social, macro-economic, and policy factors that have also caused financial strain for the industry as a whole. Notably, over the past two years the industry has faced floods, arson and sky-rocketing operational costs.
“In the midst of these crises, the industry has also had to contend with the destructive Health Promotion Levy, which has caused enormous hardship for millers and growers alike since its implementation in 2018. The result of both internal and external pressures has been the entry of a second miller into business rescue in just five months,” Funke said.
He said at this stage the extent of the financial distress at Gledhow was known only to the company and the business rescue practitioners.
“SA Canegrowers, for its part, is eager to engage with the business rescue practitioners at Gledhow in due course to determine the extent of the threat to the mill and what plan is being put in place to prevent the mill’s failure.
“The sugar industry is highly interdependent, therefore the possibility of bankruptcy for any mill is of great concern to our members.
“It is our hope that this statutory process of business rescue will result in a stronger, financially sustainable mill for the Gledhow supplying growers,” said Funke.
He said that without sight of the state of Gledhow’s finances and specific internal pressures at the mill, it was difficult to prescribe any solutions and It was the role of the business rescue practitioners to make an accurate diagnosis of the problems at Gledhow and to create a plan to remedy these problems and save the mill.
He said SA Canegrowers would monitor the situation closely and wait to see the business rescue plan compiled by the business rescue practitioners.
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