4 June 2013 – South African based sugar producer, Tongaat Hulett, says that renewable energy, in the form of biofuel production and electricity generation, is of increasing importance to the business.

The coming year should see the compilation of a bid by the company for an 80 MW power station following the ministerial determination for 800 MW of cogeneration power issued in December 2012. Planning for the project, including the environmental impact assessments and plant construction contracting processes, is well advanced.

Tongaat Hulett says that the development of renewable electricity continues to gain impetus from the looming power crises which South Africa faces over the next decade if it wishes to grow the economy significantly and generate the potential for job creation on the scale the country’s government is targeting.

In the medium to long term, ethanol is perhaps the largest expansion opportunity which the sugar industry in the southern African development community (SADC) has and offers governments of the southern African region an opportunity to create jobs and improve the lives of rural communities. If the SADC were to follow the Brazilian model over the next 20 years, with 60% of petrol being derived from ethanol and all growth in demand captured by ethanol, it would require the construction of about 120 mills that have the capacity to produce 320,000 tonnes of sugar a year, create 1.8 million new direct jobs, and at least as many indirect jobs.

The associated power generation would be equal to Medupi and Kusile combined, which equates to approximately 9,500 MW. For South Africa, it would provide between 13% and 25% of the required carbon footprint reduction needed to meet the target which the country committed to during COP 15 (Copenhagen, 2009).

Unlike electricity generation, which can be started from a South African perspective, large scale ethanol production requires a regional ethanol regime. Some 70% of the market for ethanol lies in South Africa, with the bulk of the production potential lying within other SADC countries such as Mozambique, Zimbabwe, Zambia and Angola.

Tongaat Hulett says the ideal starting point would be for the South African sugar industry to develop the necessary framework that would facilitate the industry converting its existing sugar exports on the world sugar market to ethanol. Converting the current South
African industry’s export sugar would result in a 5% blend that is equivalent to 600 million litres of ethanol a year. The South African fuel market is 12 billion litres of petrol a year.

If Tongaat Hulett converted one of its four South African mills to ethanol it would require an investment of approximately R700 million and would produce some 125 million litres a year.

Tongaat Hulett currently produces 52 MW of power at its four South African mills and this can be increased to between 320 MW and 360 MW. The capital cost of converting one sugar mill, together with making it energy efficient will currently cost some R3 billion.