Jamaica Sells Sugar Refineries to Complant

123jump.com Staff
30 Jul, 2010
New York City

Jamaica finalizes the sale of final three sugar refineries to China based Complant International for US$9 million. The deal may pave for the build out of 200,000 tons ethanol refinery that may alleviate the imports of crude oil in Jamaica.

[R]8:00 AM Miami – Jamaica finalizes the sale of final three sugar refineries to China based Complant International for US$9 million. The deal may pave for the build out of 200,000 tons ethanol refinery that may alleviate the imports of crude oil in Jamaica.[/R]

Jamaica is scheduled to complete the sale of the remaining three sugar refineries to China based Complant International Sugar Industry Company Limited for an initial investment of US$9 million.

Prime Minister Bruce Golding is expected to sign the memorandum of understanding as early as today to complete the sale of the three remaining sugar refineries in the nation. The deal was originally broached in 2007 in the wake of budget crisis and financial crunch that led to the emergency loans from the International Monetary Fund.

Caribbean nations have been divesting their sugar plantation and refinery businesses as the region continues to focus on expanding tourism and service industry. World sugar prices had been depressed for more than a decade before surging near 100% in the last two years.

The details of the deal are still murky and China based Complant has plans to develop ethanol refinery in the near future contingent on the feasibility study. The company is expected to rehabilitate the sugar cane fields immediately on the three estates.

Complant is expected to complete the feasibility of building a sugar and ethanol refinery with a capacity of 220,000 tons a year at an estimated cost of as much as US$180 million and may take as long as three to four years. The plans are still tentative.

Though Complant will take control of the refinery and the land surrounding three plantations immediately, the company will have to wait for at least another year.

The state controlled refineries have an agreement with Tate & Lyle to supply 100,000 tons of sugar a year at a price of US$26 million in the first year and US$20 million in the year that ends in June 2011.

As a part of the deal with the Jamaican government, Complant will lease 30,000 hectares of sugar cane fields at a US$35 per hectare a year for fifty years. The lease can be extended for 25 more years.

Recently Trinidad divested all state-controlled sugar plantations as the twin-island nation focuses on expanding its natural gas exploration.

Sugar Company of Jamaica controlled by the state controlled five sugar plantations and refineries that essentially formed the sugar industry in Jamaica. The government began the dismantling of the industry after sugar prices were nearly unchanged for a decade, lack of productivity improvements and mounting losses.

Complant will take control of three plantations and factories; Bernard Lodge, Frome and Monymusk. The two other estates were sold to local investors in June 2009.

Sugar prices have traded in the international markets between 11 U.S. cents and 23 U.S. cents per kilo between 1999 and 2007 and spiked to as high as 58 cents per kilo in 2009 before settling to below 25 cents a kilo in the recent months.

Etahnol prices in New York trading have also collapsed in the last one year and the spread between the ethanol and gasoline prices has turned in the favor gasoline. The price collapse has led to a number of U.S. ethanol refineries to be idled or shuttered.

Caribbean islands have an advantage when it comes to processing ethanol. Several Brazil based ethanol refineries have looked at the region to distill ethanol before exporting to the U.S. for lower import tax but the economic viability of the business has been in question after the recent collapse.