Lesaffre and Tongaat
Lesaffre, Tongaat Hullett in molasses impasse
GWERU-based yeast manufacturer Lesaffre Zimbabwe will hold a meeting with Tongaat Hullett this week to find common ground after the latter proposed to hike the price of molasses by 25 percent.
Tongaat Hullett, the country’s largest sugar processor also intends to cut its supplies of molasses to the yeast manufacturer by 40 percent.
The increase in the price of molasses from $60 per tonne to $85 per tonne comes after a depressed production in sugar cane following a poor summer cropping season.
Molasses, a sugar production by-product, is a key component in the production of yeast as it provides the sugar source.
Anchor Yeast managing director, Mr Bernard Laguerre told Chronicle Business that an increase in the price of molasses will affect the company’s competitiveness.
“We are meeting on Tuesday with Tongaat Hullett so that we agree on how we move forward after they announced plans to increase the price of molasses. The raw material is a key component in the production of yeast and any increase will result in us increasing our prices, which will affect our competitiveness especially in light of imports coming mainly from South Africa,” he said.
Mr Laguerre said if no solution is found Lesaffre may be forced to import molasses from Mozambique.
He said this might affect the company’s plans to export into the region should it face challenges as a result of the price hike.
Early this year, Lesaffre Group snapped 60 percent shareholding of Anchor Yeast to take over management control in a deal worth $17 million.
The company has already announced plans to start exporting to Zambia, Malawi and Mozambique next month.
Lesaffre Group has pledged to inject $5 million in the next two years into its subsidiary Lesaffre Zimbabwe as part of efforts to increase production at its Gweru factory.
The French conglomerate, which controls 60 percent of the world market and its products are sold in more than 180 countries, last year injected $3,5 million into the Gweru business.
Lessafre Zimbabwe produces 5,000 tonnes of yeast annually.