HomeBusinessProject Kilimanjaro off-track ...…as Hippo scours markets for fresh funding

Project Kilimanjaro off-track ……as Hippo scours markets for fresh funding

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BY TAURAI MANGUDHLA

ZIMBABWE’S adverse economic conditions have stalled progress at sugar producer, Hippo Valley Estates’ multi-million dollar Project Kilimanjaro, the firm said on Tuesday.

Project Kilimanjaro, which was expected to be completed in 2025, has suffered serious setbacks after Hippo failed to secure funding from domestic financiers.

Zimbabwean banks have generally pursued a cautious lending strategy in the wake of steep inflation hikes at the beginning of the year, as well as exchange volatilities.

“Project works have been slowed down on account of delays in obtaining the requisite funding from financial institutions at the back of adverse economic conditions,” Hippo said in a statement accompanying financial results for the half year ended September 30, 2020.

On completion Project Kilimanjaro is expected to contribute significantly to the industry’s ability to fully utilise its installed milling capacity of 600 000 tonnes of sugar by 2024/25.

This was projected to position Zimbabwe as one of the most competitive sugar producers in the region.

The company said alternative funding structures for completion of the project were being considered.

Hippo said 80 hectares of on cleared land had been put under maize, while an additional 1 500 hectares would be for sorghum in partnership with government, as part of efforts to improve food security.

It said successive poor rains during the last two seasons resulted in minimal inflows into dams that supply sugar estates.

“While forecasts for the current rainy season predict a normal to above normal rainfall which will secure irrigation water for the industry for at least two seasons, water conservation initiatives including reduced water application rates to levels that are not a deterrent to normal crop growth were instituted earlier in the year as a precautionary measure,” said Hippo.

The report said total industry sugar production from the current harvesting season was forecast at between 430 000 and 440 000 tonnes compared to 441 000 tonnes in 2019.

Hippo said efforts to maximise sugar production through yield improvement initiatives are on-going for both company-owned and private farmer-owned cane fields through strategic partnerships.

“Work on the 4 000-hectare cane development project (Project Kilimanjaro) being undertaken by the company in partnership with sister company Triangle Ltd, government and local banks has seen a total of 2 700 hectares of virgin land being bush cleared and ripped and 588 hectares planted to sugarcane,” said the company.

Hippo’s focus is on ensuring fulfilment of local market requirements while growing exports into regional premium markets.

In a review of operations, Hippo said sugar production for the period of 147 960 tonnes was lower than the 152 076 tons in 2019, in line with reduced total cane deliveries to the mill.
The company’s own cane deliveries fell by 2% while deliveries from private farmers declined by 9%.

Hippo’s total revenue for the period increased by 21% to $6,9 billion owing to good realisations from export markets.

However, operating profit and profit for the period decreased by 16% to $2,6 billion and 29% to $996 million, respectively, weighed down by a fair value loss on cane biological assets of $886 million compared to a gain of $604 million prior year.

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