Lesaffre, Tongaat Hulett resolve molasses impasse
GWERU-BASED yeast manufacturer, Lesaffre Zimbabwe, has resolved its differences with sugar processor, Tongaat Hulett, after the latter proposed to hike the price of molasses by 25 percent.
Tongaat Hulett, the country’s largest sugar processor also indicated that it would cut its supplies of molasses to the yeast manufacturer by 40 percent.
A meeting between the two parties last week saw the sugar processor hiking the price of molasses by $9 to $69 per tonne.
Tongaat Hulett had earlier announced intentions to increase the price of the commodity from $60 per tonne to $85 per tonne after arguing that the company has subdued stocks due to the depressed production in sugar cane following a poor summer cropping season.
Molasses, a by-product of refining sugarcane into sugar, is a key component in the production of yeast as it provides the sugar source.
Anchor Yeast managing director, Mr Benard Laguerre, told Business Chronicle the new pricing regime was fair as it would allow the company to remain competitive in light of regional competition.
“We are happy with the new pricing model which I believe is fair to both parties as this means we remain competitive especially if you compare us with other regional players. They have advised us that we are assured of at least 9 000 tonnes of molasses which is enough for our requirements,” he said.
Early this year, Lesaffre Group snapped 60 percent shareholding of Anchor Yeast to take over management control in a deal worth $17 million. Lesaffre Zimbabwe announced plans to begin exports to Zambia, Malawi and Mozambique in September.
Lesaffre Group has pledged to inject US$5 million in the next two years into its subsidiary Lesaffre Zimbabwe as part of efforts to ramp up production at its Gweru factory by 300 percent of current production.
Lesaffre Zimbabwe produces 5,000 tonnes of yeast annually.
The French conglomerate which controls 60 percent of the world market and its products are sold in more than 180 countries made an initial capital injection of US$3,5 million when it took over control last year.