A Mauritian investment company, Terra Mauricia Ltd. (TERA), plans to build or buy a third sugar factory in Africa at a cost of about $200 million as growth in its domestic market peaks.
Terra’s agricultural unit is the largest producer of specialty sugars in the Indian Ocean island nation, with output forecast to reach 90,825 metric tons in 2012, and expansion will be best achieved outside Mauritius.
“We currently have four projects under review in Eastern and Central Africa,” Strategic Development Executive, Sebastien Mamet said.
Mamet adds that, “Governments in some African countries are keen to develop the sugar sector in their countries and consequently facilitate investments. The political climate is improving and the continent is a net buyer of sugar”.
While Terra’s loss widened to 125 million rupees ($4 million) for the six months through June from 81.2 million rupees a year earlier, the company had assets of 14.34 billion rupees.
“We don’t have any debt,” Mamet said. “To finance the project we expect to raise half through loans and the difference in equity.”
The group has a 25 percent stake Sucrivoire SA, which owns two sugar mills in Ivory Coast, catering for about half of the country’s domestic requirements. Output is expected to rise to 93,000 tons in 2012 from 90,000 tons a year earlier.
“Our first choice will be to buy an existing mill, otherwise we will have to start from scratch,” Mamet said.
The stock is the best performer of four sugar-related companies on the 40-member SEMDEX (SEMDEX) index of the Mauritius Stock Exchange. Terra declined 0.8 percent to 39.10 rupees, trimming gains this year to 2.4 percent compared with an 11 percent drop in the index, according to data compiled by Bloomberg.