Concerns as Stanger sugar mill enters into business rescue
The move has been labelled by the SA Canegrowers' Association as ‘a further signal of the sugar industry’s growing distress’
Uncertainty now surrounds more than 200 sugar cane growers following the recent decision by Gledhow sugar mill in Stanger to enter into voluntary business rescue.
The move has been labelled by the SA Canegrowers’ Association as ‘a further signal of the sugar industry’s growing distress’ amid Tongaat Hullet’s financial woes.
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The association on Wednesday called 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.
“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 KZN,” said SA Canegrowers chairperson Andrew Russell.
“As the new season commences on 1 April, Gledhow’s supplying growers now face similar uncertainty as to whether or not the mill will operate normally, and if it will be able to make payment for sugar cane delivered and meet its financial obligations to the industry,” he said.
According to reports, Gledhow mill services more than 245 growers who produce more than 1.1 million tonnes of sugarcane per year – 6% of the industry’s total output.
Gledhow said the decision to enter into voluntary business rescue comes amid a number of challenges, including the forced closure of its factory owing to social unrest in July 2021, as well as flood damage to its machinery and infrastructure in April last year.
“In addition, the Russia-Ukraine War has resulted in significant increases in essential supply costs, such as coal and other operational inputs, which has further affected the company’s operating margin and cash flow constraints,” said the company in a statement.
“Under the banner of business rescue, the operation will continue to crush the cane and produce sugar as efficiently as possible.”
While trade union UASA has expressed concern with potential job losses, they have urged workers to ‘keep the trust in their management’.
“Unemployment remains a significant threat to South Africa’s economic growth, and we cannot afford the extra pressure of liquidations or business closures.
“UASA is pleased that Gledhow’s management has taken steps to ameliorate the financial challenges and save the company from further distress,” said UASA spokesperson Abigail Moyo.
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