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Tongaat may sell power to Eskom

Internationally-known sugar company Tongaat Hulett, which has considerable expertise in bio-fuel production and electricity co-generation, faces the prospect of multi-billion-rand earnings by selling electricity to Eskom.
In its latest results statement the company said that by burning bagasse and trash in its sugar milling plants it could sell 189MW of power to the electricity parastatal. This could earn the company up to R3 billion a year depending on price, according to a Moneyweb report quoting Tongaat CEO Peter Staude, who said negotiations were proceeding.

The report added that provided prices were economical, Staude foresaw each of the group's sugar mills with an ancillary power plant. That would increase potential output to 350MW which could yield up to R3 billion a year, depending on price. To achieve 350MW would require a capital investment of R3 to R 8 billion, depending on the price Eskom was prepared to pay.

It went on to say that Staude did not disagree that Tongaat was emerging more and more as an energy company. A good proportion of the world's sugar crop was going into ethanol for fuel (60% in the case of Brazil). So energy demand underpinned world sugar prices, he believed.

Additional information:
News date: 16/11/2010

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