Hippo courts banks for fresh deals

BY TATIRA ZWINOIRA

ZIMBABWE Stock Exchange-listed sugar producer Hippo Valley Estates says it has cleared large swathes of virgin land at its
4-000 hectare Project Kilimanjaro, which is under development in the Lowveld, as it courts banks for fresh funding deals.

Project Kilimanjaro is a potentially game-changing massive undertaking that could propel the sugar industry to achieve a long-cherished ambition to fully utilise its 600 000-tonne installed milling capacity by 2025.

This could position Zimbabwe as one of the most competitive sugar producers in southern Africa.

The Kilimanjaro project is being executed in partnership with Triangle Estates, which also operates some of Zimbabwe’s largest sugarcane estates, and the government of Zimbabwe.

But in November last year, Hippo indicated that Project Kilimanjaro had drifted off-track after failing to secure funding from domestic financial institutions during the half-year ended September 30, 2020.

Lack of a clear land tenure system in Zimbabwe had also undermined the development, according to  Hippo’s previous updates.

On Friday, it appeared the involvement of President Emmerson Mnangagwa’s administration had given investors the impetus to proceed.

Hippo chairman Dan Marokane said tremendous land clearing efforts had been undertaken while outstanding issues including funding were being looked into.

Zimbabwean banks have generally pursued a cautious lending strategy in the wake of steep inflationary hikes in the past year, which were compounded by exchange rate volatilities and the Covid-19 pandemic.

“Work on the 4 000-hectare cane development project (being undertaken by the company in partnership with Triangle Limited, government and local banks, has seen a total of 2 700 hectares of virgin land being bush cleared and ripped, and 562 hectares planted to sugarcane in the prior year,” Marokane said in a trading update for the third quarter ended December 31, 2020.

“As previously reported, project works were slowed down on account of delays in obtaining the requisite funding from financial institutions, and lack of clarity on land tenure.

“Whilst new funding structures for completion of the project are being finalised, some 76 hectares and 700 hectares were put to maize and sorghum respectively, in partnership with government, as part of efforts to improve food security in the country.

“An additional 902 hectares of maize was planted on company fallow cane land as a break crop, resulting in the double benefit of maximising land use, and further improving food security.”

He spoke as the firm said sugarcane harvested during the period increased by 3% to 1 043 774 tonnes, from a 2019 comparative of 1 008 870 tonnes.

From private-owned farms, there was a 14% decrease in sugarcane harvested of 592 722 tonnes during the same period from a 2019 comparative of 687 472 tonnes.

Total sugarcane milled was stagnant at 1 691 935 tonnes compared to a 2019 comparative of 1 696 342 tonnes.

Total sugar produced declined by 4% to 204 094 tonnes from the 2019 figure of 212 004 tonnes.

“Overall cane deliveries from the company’s plantations and private farmers trailed the prior year due to the impact of irrigation power challenges as well as the dry spell experienced during the 2019/20 peak growing period of October to March,” Marokane said.

“Whilst the drop in cane from traditional industry sources was compensated for by cane sourced from a third party, sugar production reduced by 4% at the back of lower-than-expected mill efficiencies and inclement weather conditions, which interrupted the harvesting programme and impacted cane quality adversely.

“Steps are being taken during the current off-crop period to rehabilitate the mill, to ensure improved performance in the 2021/22 production year, whilst solar projects to augment electricity at critical water pumping installations have been initiated,” he added.

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