Mill closures a death knell for small towns
• Cane-growing heartland pins hope on Tongaat Hulett business rescue
The Darnall sugar mill loomed large over the small KwaZuluNatal north coast town, a hub of activity from early morning until sunset as gumbootwearing workers in hard hats hauled heaps of cane through the mill and set the noisy machinery to work. The mill was a beacon for prosperity, community and riches. Now, decades later, the tall steel structure lies dormant and rusty, and the once green sugar fields have become overrun with dirt, the nearby Nonoti filled with sewage.
The Darnall sugar mill loomed large over the small KwaZulu-Natal north coast town —a hub of activity from early morning until sunset as gumboot-wearing workers in hard hats hauled heaps of cane through the mill and set the noisy machinery to work, shredding the sweet, juicy canes into sap and later molasses and commercial sugar.
The mill was a beacon for prosperity, community and riches. Now, decades later, the tall steel structure lies dormant and rusty — the cacophony of sounds emanating from the grinders have been silenced.
The once-green sugar fields have become overrun with dirt, the nearby Nonoti filled with sewage.
Established in 1846, the Darnall sugar mill provided work for the small town and the surrounding farming community for more than 170 years. In addition to the direct job losses when the mill was closed, cane growers were burdened by the added costs of transporting their cane to the three remaining Tongaat Hulett mills further afield — Maidstone near Tongaat, or further north to Amatikulu and Felixton mills.
News of beleaguered sugar giant Tongaat Hulett’s surrendering its fate to a business rescue process in the face of insurmountable debt sent shock waves across this cane-growing heartland.
Cane growers in the region along with industry leaders fear the dire financial straits of the former flagship sugar giant is pushing the north coast sugar cane heartland into an economic abyss.
Already Darnall, neighbouring KwaDukuza (Stanger), is reminiscent of a ghost town after Tongaat Hulett Limited closed its canecrushing mill in 2020, tearing the lifeblood out the oncethriving farming village.
In February 2020, the townspeople of Darnall suffered enormous heartache.
Generations of families disintegrated as villagers left to seek employment in bigger cities and nearby towns when Tongaat Hulett shut down the mill. Almost 400 jobs were lost at the mill alone, badly affecting economic activity in the small farming community.
Residents of Darnall who spoke to Business Day are unsettled. There is deep sadness as they reminisce about more prosperous times.
“Some in our family went to work in the other mills when ours was shut down. What happens to them now? Where do they go? If the rescue does not happen then it happens all over again,” says Sandra Jones.
Darnall is a shell of its former self. Empty streets and the absence of activity project the hallmarks of a ghost town. Homes stand empty and broken and dilapidated buildings hover behind thick, unkempt bushes.
The Nonoti river that borders the town is filled with raw sewerage and litter from the nearby Zamani settlement, built to accommodate disadvantaged communities.
Even farming land is now being used as dump sites. Tongaat Hulett once provided basic services including the maintenance of the roads, but now potholes and damage from the floods point to years of neglect. The unemployment ushered in a sharp rise in crime, worsened by the collapse of service delivery and infrastructure failure. Property values have plummeted.
It is unlikely the mill will ever be recommissioned. Vandalism has taken a crippling toll and the equipment in the mill has been removed to keep other poorly maintained mills operational.
For sugar cane farmer and rural development project manager Poobalan Reddy, Darnall has been home to him and his family for decades. He is having sleepless nights wondering how things are going to end for the industry he has spent a lifetime working in.
“It breaks my heart to think of the impact that the mill closure has had on the town.
The term ghost town has stuck. People who lost their jobs also lost their homes. The knock-on effect on the local economy from local small business to the Trading Store was severe and everything changed in an instant.
“The rural communities depend on the sugarcane project I manage. It is situated on a land claims zone of 300ha that now belongs to the community. If the process is not successful, families will starve.
“The labourers will be without their bonus pay for December. Migrant workers will not be able to go home for Christmas.
“If other mills close down, it will be a disaster as employment opportunities at local towns like Kwa-Dukuza and Ballito have already been saturated by those who became unemployed,” he said.
Former resident Sydney Naidoo recalled: “The mill was the town. My father and his father and then I worked there. It was a natural progression for most families. Generations of mill workers went to work every day. When the mill was shut down, the town died. We left. Most of the younger generation also left for the bigger city life.”
The future of the Darnall Country Club — a once popular hub for locals and those from nearby towns — is also facing an uncertain future. It is being kept afloat by loyal members. “When the town suffered from the mill closure, the club also took a huge knock. We are still reliant on Tongaat Hulett to keep the public green space maintained. The members are holding it together, but we are definitely in dire straits,” said club manager Martin Alborough.
Among the dwindling number of farmers are three neighbouring friends whose farms lies adjacent to the popular tourist seaside village of Zinkwazi, a stone’s throw away from Darnall. The closure of the Darnall mill has hit them hard, but options are limited as they are contracted to grow sugarcane on 70% of their land exclusively for Tongaat Hulett.
“One can never explain the emotions we felt when the mill shut down,” said Rob Taylor who has been farming in the area since the 1970s. “Our labour force shrunk and they had to seek employment in the nearby towns. Some were lucky to be absorbed into the three other mills, Maidstone, Amatikulu and Felixton. Farmers sold up in droves and others had their farms handed back to communities as part of the land claims process.
“The numbers of farmers have shrunk because smaller farmers feeling the pinch are selling out to bigger farmers.” Furthermore, there isn’t enough cane-crushing capacity with one less mill, leaving farmers on the back foot financially.
Accordingly, some farmers are leaving chunks of their land to stand fallow rather than risk the cost of maintaining unharvested sugar-cane.
Transport costs, input costs and high levies are a nightmare for most growers. Covid-19, the July riots and the recent flooding has also left the industry in dire straits.
DIVERSIFYING
“The inability to crush all the cane is predominantly as a result of the closure of Darnall. Maidstone mill is not running at optimum capacity. Under ideal conditions, had the mills been properly maintained, this would not be a problem,” said Ryan De Matais.
“Any unharvested crop that is left in the ground needs fertilisation and pesticides to keep it harvest-ready, but this costs money. The first impact is your labour.”
The current scenarios have left once financial viable farmers struggling to make ends meet and unable to build up sufficient financial reserves in the event of another drought, which is inevitable.
“To mitigate the new challenges, we have looked at diversification like macadamia nuts and other products on the 30% of our remaining farmland, but this diversification requires significant financial resources and takes years to become viable,” said Dieter Lutge.
Despite the challenges, loss in income and the devaluation of farm land, these farmers and many others like them remain eternal optimists.
“If one considers that a farmer who once owned 100ha of land was in a comfortable position to send their children to private schools, now someone who owns 300ha of cane land is finding it hard to just make ends meet,” said Lutge.
“We are South Africans, we will remain positive. We will keep our heads down and push ahead, there is simply no other option.
“We bought our land at a premium, but there has been a sharp drop in land value, so we have no choice but to continue. There is just too much to lose if we give up now, said De Matais.
The news small-scale cane farmers supplying Tongaat Hulett sugar mills in Felixton, Amatikulu and Maidstone had received their overdue payments for cane delivered in September, has given some hope. Commercial farmers are to be paid out by Friday for the same period.
“The news that farmers have been paid brings a glimmer of hope. This means that the mills will be opening for crushing soon. We will not allow another Darnall situation to emerge as this will be catastrophic for the industry. We represent 20,000 black farmers,” said SA Farmers Development Association CEO Siyabonga Madlala.
CEO of the iLembe Chamber of Commerce, Industry and Tourism Cobus Oelofse says there is a significant amount of anxiety — especially considering the knock-on effect of delayed payments to suppliers and salary payments.
“The iLembe Chamber holds the view that the business rescue practitioners do not need to be reminded of the gravity of the situation, and the importance of ensuring that the sugar value chain is restored and operating without any further disruption. The immediate money loss to our local economy will be significant, if not.”
“The impact will be significant, with the social and economic repercussions felt way beyond our region. Estimates show that the number of people directly employed in the mill areas affected to be in the region of 500,000, considering that the area directly affected is huge — Durban to Mtubatuba, inland to Eshowe, Melmoth, Kranskop and Kearnsey.
INDISPENSABLE
WE WILL REMAIN POSITIVE. WE WILL KEEP OUR HEADS DOWN AND PUSH AHEAD, THERE IS SIMPLY NO OTHER OPTION
“If you include dependants, that figure can be in the region of 2-million people, which will exclude support service businesses and their employees.
One chamber member succinctly summarised the mood, considering the history of the sugar industry in SA — this is not merely a speed wobble, it is a collision that needs to be avoided,” he added.
Tongaat Hulett’s financial woes follow years of escalating debt, but it is the disclosures of alleged financial misstatements and mismanagement under previous leadership that wiped billions off the company’s equity and share price in 2019.
Tongaat Hulett now has a working capital shortfall of about R1.5bn to complete its 2023 operational obligations.
KwaZulu-Natal is the country’s sugar hub, and sugar is the largest contributor to the agricultural GDP of the province and consequently indispensable to the province’s economy. Tongaat Hulett provides 45% of sugar in the region.
More than 12,000 sugar cane farmers stand to lose their livelihoods if the business rescue fails.