Singapore-listed firm Olam sets up US$200m sugar refinery in Nigeria

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SINGAPORE, Dec 04, 2010 (The Straits Times – McClatchy-Tribune Information Services via COMTEX) —

Commodities supplier Olam International is setting up a US$200 million sugar refinery in Nigeria with a joint-venture partner.

Singapore-listed Olam will take 80 per cent of the entity, with Nigerian partner Lababidi Group (LG) holding the rest.

The refinery will be located on Tincan Island, on a site next to the port of Nigeria’s largest city, Lagos.

Olam said that a port-based refinery would enjoy cost and logistics advantages over an inland facility.

It would also provide better access to markets in West Africa and other countries on the continent.

According to a presentation posted on the Singapore Exchange website, Nigeria is the largest consumer of sugar in Africa, excluding South Africa.

Its consumption increased from 1.25 million tonnes in 2003 to 1.6 million tonnes last year.

Olam expects consumption to increase to 2 million tonnes by around 2014 due to population growth and rising incomes.

Managing director and chief executive Sunny Verghese said Olam had developed capabilities in the sugar industry through investments in India and Indonesia over the past few years.

“We are now excited to have this opportunity to enter into a joint venture with LG to set up a port-based refinery in Nigeria,” he said.

LG chairman Chief Maan Lababidi said: “We believe that Olam’s global network in sourcing, procurement, extensive marketing and distribution within Nigeria, strong risk management culture and sugar refining expertise will be critical to the success of the project.”

The refinery is expected to start production in mid-2013 with a capacity of 1,500 tonnes per day.

It should produce 450,000 tonnes of white sugar during its first full year of operation.

Raw sugar will be sourced primarily from Brazil, with the refined product to be supplied to domestic as well as other African markets.

LG is one of sub-Saharan Africa’s most diversified business groups, with interests in wheat milling, telecommunications and port real estate.

The group operates wheat mills in Guinea Conakry and controls Starcomms, Nigeria’s fourth-largest telecommunications operator.

Last month, Olam announced ventures in Africa which include a US$1.3 billion fertiliser plant and a US$236 million investment plan for palm plantations in Gabon.

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