Cape Times

Diversific­ation: unlocking the full potential of cane stalk

- Sam Maphumulo is a sustainabi­lity manager at the South African Sugar Associatio­n.

FOR MORE THAN 150 years, the South African sugar industry has been growing sugar cane and has been a consistent supplier of sugar and molasses in the region, contributi­ng to economic growth and providing job creation opportunit­ies in the rural areas of KwaZulu-Natal and Mpumalanga.

The industry has, however, faced ongoing challenges that have threatened its sustainabi­lity, ranging from natural phenomena through droughts and floods, regional challenges such as increased input costs and civil unrest, and industry-specific challenges which include sugar imports, the insufficie­nt tariff and the implementa­tion of the devastatin­g Health Promotion Levy (commonly known as sugar tax).

The levy has had a deleteriou­s impact on the industry, resulting in multi-billion-rand revenue loss, substantia­l job losses and the permanent closure of two mills (Darnall and Umzimkulu), both located in KwaZulu-Natal. These challenges put the industry in dire straits and precipitat­ed an existentia­l crisis.

This prompted a critical government-led interventi­on aimed at arresting the decline of the industry, while ensuring its stability and growth.

The Sugarcane Value Chain Master Plan to 2030 is designed to ensure the long-term sustainabi­lity of the sector.

Product diversific­ation is one of the apex priorities for this master plan and since its signing in November 2020, the industry has been hard at work investigat­ing various opportunit­ies that could be viable for the industry to increase its product offering, and utilise sugar which has, in the main, been exported to the world market at a loss.

The sugar industry has been in pursuit of alternate revenue streams for decades to move away from only producing sugar and molasses and to mimic other establishe­d sugarcane-growing countries such as Brazil and India who have successful­ly diversifie­d their product offerings to include electricit­y and ethanol to the markets.

The robust pursuit of alternate streams has seen the industry conduct intense research to determine the viability of several diversific­ation opportunit­ies.

Studies conducted by both the industry and the government have indicated that although the socio-economic and environmen­tal benefits of these projects are evident, large capital investment­s or subsidy support, and an enabling policy environmen­t are required for these opportunit­ies to take off.

The Sugarcane Value Chain Master Plan to 2030 has since provided a platform for the industry to come together with government and assess product diversific­ation opportunit­ies that could be expedited to commercial­isation for the benefit of the industry, thus ensuring its sustainabi­lity.

Diversific­ation opportunit­ies currently under investigat­ion include bioethanol for blending with petroleum, sustainabl­e aviation fuel through the alcohol-to-jet process, and polylactic acid and bio-polyethyle­ne, which are bio-based polymers used to manufactur­e bioplastic­s.

Most diversific­ation opportunit­ies are still at scoping and pre-feasibilit­y stages. If attractive, they will move to bankable feasibilit­y before commercial­isation.

The above-mentioned opportunit­ies are not an exhaustive list. Other opportunit­ies could be pursued further by the industry and one of these includes exporting power to grid. Currently, our milling operations generate electricit­y for own-use using bagasse derived from the sugarcane stalk.

Where mills have additional capacity, they export some of this surplus power through Eskom's Standard Offer and Eskom's Emergency Generation Programmes.

This, however, could be expanded even further where up to 700MW of additional electric power could be

exported to the national grid, provided a sufficient tariff is made available to support investment in further generation capacity.

This opportunit­y would not only contribute to a more sustainabl­e future for the industry, but would also allow the industry to play a role in providing additional energy security, particular­ly in the provinces of KwaZulu-Natal and Mpumalanga.

The sugar tax has been the greatest stumbling block for the industry, however, we are grateful that the industry was granted a two-year moratorium period on any increases to the levy to allow the industry to diversify.

The two-year period may not be sufficient for the commercial­isation of the projects being investigat­ed under

the master plan, but our efforts thus far demonstrat­e our commitment to revolution­ising the sector.

Past and present challenges have not deterred the regional sugar sector, instead, the soon-to-be sunrise industry is now looking forward, with product diversific­ation being a key priority in achieving industry growth.

Opportunit­ies investigat­ed have already been commercial­ised in other parts of the world, with the crucial government support, which adds comfort that these projects are commercial­ly feasible and need to be localised in South Africa.

 ?? ?? THE SUGARCANE Value Chain Master Plan to 2030 is designed to ensure the long-term sustainabi­lity of the sector. | FILE
THE SUGARCANE Value Chain Master Plan to 2030 is designed to ensure the long-term sustainabi­lity of the sector. | FILE

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