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Chinese fed up - Investors want out of Monymusk sugar deal

Published:Wednesday | August 30, 2017 | 12:00 AMMark Titus
Chief Executive Officer of Pan Caribbean Sugar Company, Liu Chaoyu.

WESTERN BUREAU:

Pan Caribbean Sugar Company (PCSC) said earnest efforts are being made to offload Monymusk Sugar Estate to a new operator. It is also adamant that whatever the outcome, the Clarendon-based factory, which racked up more than US$60 million in losses under their management, is not in its future plans.

"Our investment in Jamaica has far exceeded our commitment," Liu Chaoyu, the chief executive officer of PCSC, told The Gleaner. "Monymusk has the capacity to process about 600,000 tonnes of cane, but every year we have less than 200,000 tonnes. That cannot work."

According to Chaoyu, who spoke through her interpreter Sun Y' Dan, it is difficult to operate the factory with the myriad problems that exist there.

"We cannot run a factory with input so low, plus there is the fallout in sugar prices, continuous drought, illicit cane fires and theft, all contributing to a total loss of US$60 million," said Chaoyu. "So in order to prevent the total collapse of Pan Caribbean and to protect the development or survival of Frome, we had to make the painful decision of suspending the operation at Monymusk."

She added, "At the same time, we made it clear to the government our intention of actively seeking potential investors locally or a foreign country to purchase Monymusk or be potential partners. Our choice would be a complete sale."

Monymusk is among three sugar estates bought by PCSC for US$9 million in a divestment deal with the Jamaican Government in 2009, the others being Frome and Bernard Lodge. The company then invested more than US$260 million to renovate the factories and fields, while enduring a rather turbulent relationship with other sector players, mainly because of differences in culture and labour practices.

Relations with locals have improved drastically since Chaoyu took over the reins of the firm last December, with several communities in which the factories operate benefiting from their social intervention programmes, while cane farmers are getting better support to improve productivity.

 

OPERATIONS SUSPENDED

 

In 2016, PCSC decided to place its focus on the Frome Estate in Westmoreland, suspending operations at Monymusk, which forced the Government to enter a short-term management agreement to run the sugar factory in order to save the livelihoods of hundreds of cane farmers along the Vere Plains.

Earlier this year, the Chinese firm asked the Government to continue operating the factory for the new crop, but Karl Samuda, minister of industry, commerce, agriculture and fisheries, is seeking an undertaking that the owners will offset the $250 million it costs to operate the facility.

However, Chaoyu, who recently met with Samuda, does not intend to utilise her budget on Monymusk, as her focus is on improving the performance at the 60-tonne capacity of Frome.

"We appreciate the Government's support when we decided to suspend operations at Monymusk, and we tried to offer the best assistance possible to them," the PCSC boss said. "We offer the factory to use free of cost, and we helped them to find Chinese technical experts to assist with the operation."

Chaoyu added, "We offered our agriculture irrigation systems and facilities at a nominal cost of J$1,000, and we offered our harvesting and agriculture equipment for them to use at a most favourable price. That existing arrangement is good for us."