She was speaking at the formal launch of the project to expand production at the Xinavane and Mafambisse sugar companies, in both of which the main shareholder is the South African Tongaat-Hulett Group.
Over the last nine years, she said, about 300 million US dollars has been invested in the four operational sugar plantations and mills - at Xinavane and Maragra, in Maputo province, and at Mafambisse and Marromeu in the central province of Sofala.
The rehabilitation of these four companies, she said, "has had significant results in production, which rose from slightly more than 39,000 tonnes in 1998 to 242,000 tonnes in 2006. We have the prospect of doubling this to 500,000 tonnes by 2009".
"This was the dream we had when we started to rehabilitate the sugar companies, and it's a dream that is becoming reality", Diogo declared. "It means that, when it comes to sugar, Mozambique will speak with a loud voice in the concert of nations".
The expansion of the Xinavane and Mafambisse companies will cost 177 million dollars - 143.9 million to be invested in Xinavane and 33.1 million in Mafambisse. Most of this will come from Tongaat-Hulett, but, as a minority shareholder, the Mozambican state is investing 15 million dollars.
With this new investment, sugar production at Xinavane is expected to rise from 61,000 tonnes in 2005 to 180,000 tonnes in 2009. With an extra 6,500 hectares planted with cane, the cane production should rise from 509,000 tonnes in 2005 to about 1,5 million tonnes in 2009.
According to the Tongaat-Hulett Chief Executive Office, Peter Staude, new equipment will be installed raising the Xinavane sugar factory's milling capacity from 150 to 380 tonnes per hour.
As for Mafambisse, an extra 2,100 hectares of irrigated land will be planted with cane, and the mill here should produce 82,000 tonnes of sugar a year by 2009 Some of the sugar will be sold on the domestic market, but Tongaat-Hulett expects to sell most of the increased production in Europe. As a least developed country, Mozambique should be able to sell its sugar, free of duty or quotas, to members of the European Union, under the EBA (Everything But Arms) trade arrangements.
For Diogo, the expansion is fundamental, since the economies of scale it allows will make the sugar produced at Xinavane and Mafambisse more competitive. This is key to the conquest of the export markets that the Mozambican sugar industry now relies on, since the domestic market is saturated.
"The increase in the production of Mozambican sugar, and the increased competitiveness of the sugar companies will result in increased fiscal revenue for the state, allowing a reduction in the dependence of the state budget on foreign aid", the Prime Minister said.
Taking the EU at its word, Tongaat-Hulett believes that the price of exported sugar will remain steady, at 19.6 US cents a pound, between 2009 and 2015. Staude says that the company's objective is to produce sugar at a cost of 8.5 US cents a pound, which would compare favourably with the costs of production of one of the world's largest sugar producers, Brazil.
The expansion projects should create 6,638 new jobs in Xinavane and 2,145 in Mafambisse.
SOURCE: AIM
