Gold Star Sugars shuts Harare refinery in Tongaat Hulett price row

HARARE – Gold Star, a subsidiary of ZSE-listed StarAfrica, has temporarily closed its Harare refinery and placed employees on indefinite leave, citing a sharp increase in raw sugar prices by its supplier Tongaat Hulett.

Gold Star commercial executive Revesai Gwenhamo said raw material price increases made their operations unprofitable.

“We are writing to advise that we have closed the Goldstar Sugars Harare Refinery with effect from Monday, February 13, 2023, until further notice,” Gwenhamo said in a notice to customers.

“The closure is a result of a raw sugar price increase taken by our supplier on February 9, 2023, which makes it difficult for the company to produce and sell refined sugar at a competitive and viable price, as well as onerous trading terms which have constrained raw sugar supplies to the refinery.

“We have engaged the supplier and look forward to finding an amicable solution to enable us to resume operations as soon as possible. We will keep you informed of progress on the matter.”

According to insiders, Tongaat Hullet raised the price of raw sugar to maintain its monopoly in the industry.

Last year, a value chain report published by the National Competitiveness Commission (NCC) said that the country’s sugar industry is being hampered by Tongat Hulett’s monopoly and its subsidiaries dominating all levels of the sugar chain.

NCC’s report lamented that a combination of policy and value chain inefficiencies rendered locally produced sugar and related products uncompetitive for the export market.

Currently the price of locally produced sugar averages US$738 per tonne, above a SADC average of US$500.

Tongaat Hulett spokesperson Charity Tambandini declined to comment on the factors that led to the hike in raw material prices but instead stated that her company was involved in ongoing discussions with Gold Star to find an amicable solution.

“There are high-level discussions currently underway to clarify issues and once discussions are over and a position agreed, all stakeholders will be informed,” said Tambandini.