News - 1st Quarter 2013

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• WATER: LIFEBLOOD OF ILLOVO OPERATIONS

  THE main picture shows the Ubombo sugar factory in Swaziland against the backdrop of the Lubombo Mountains, with the Van Eck Dam in the foreground. Fed via canal from the nearby Usuthu River, the dam is a vital water resource for irrigation operations. The Illovo group is making progress towards a standardised, environmentally sound, effective and sustainable use of water.

  WATER: LIFEBLOOD OF ILLOVO OPERATIONS WATER is a vital resource in the production of sugar cane, and the efficient and effective sourcing and distribution of water on sugar estates that rely on irrigated water for crop growth and sustenance is increasingly becoming a major focus area in the company’s sugar cane agronomic processes. Two key water workshops have taken place at Illovo Sugar’s Head Office at Mount Edgecombe recently. 1 The first was the ISL Agricultural Water Strategy and Framework (AWS&F), the first workshop of its kind within the Illovo Group, with the gathering of senior agricultural water and fields ops management from all irrigated estates, organised by Brent Griffiths under the Group Agriculture – Technical Services banner. It signified the progression towards a more standardised, environmentally sound and effective use of a resource – water - the management of which is key to the optimisation and sustainability of our agricultural enterprise. In addition, the workshop was a very useful conduit for technical and operational managers from across all the irrigated Illovo agricultural estates, to meet and share knowledge and experiences within their respective fields. The majority of those present at the AWS&F workshop had never met prior to this event. There was also representation from the South African Sugar Research Institute (SASRI) in the person of Mr Ashiel Jumman, while Miss Timony Siebert represented our Water Footprinting partners Talbot & Talbot. Although there is still a fair way to go before the goal of the Agricultural Water Strategy and Framework is fully achieved, participants felt that the workshop was a resounding success and provided a strong base for moving forward. The next step in the process will be to determine the gaps that exist on each irrigated estate to achieving the agreed framework. This would be inclusive of the timelines and budgets required to close those gaps, within a cost effective environment.

  2 IRRIGATION MANAGEMENT WORKSHOP – FOCUS ON TRAINING THE AWS&F workshop was followed early in August by a one-week irrigation management workshop run by SABI (South African Irrigation Institute) at the Mount Edgecombe office which focused on the training and development of agricultural employees in world-class irrigation systems. This is an integral part of the Group’s agricultural water strategy. Twelve managers from agricultural departments across the Group attended the workshop, which was facilitated by Isobel van der Stoep, a senior executive of SABI. It covered topics such as: evaluating pivot and dragline irrigation systems as well as flood irrigation, calculating flow rates and water pressure measurement, types of irrigation pumping and driving systems, irrigation scheduling and the importance of understanding the implication of different soil types for irrigation. The use of soil probe technology for measuring soil moistures was also covered. The workshop involved both classroom and infield sessions.

• SENIOR APPOINTMENTS ACROSS THE GROUP

• KILOMBERO’S GOLDEN MILESTONE

  

  In October 2012 Kilombero Sugar Company celebrated 50 years of sugar production since its startup in 1962. At the Estate, the event was marked by the annual GM’s Cup sports finals which were accompanied, as always, by huge amounts of fun and excitement. Illovo Sugar’s managing director, Graham Clark, and other members of the executive were among those who attended a gala dinner celebrating the occasion.

  
  

  Muhoja Manane (chief engineer – Msolwa mill) decided to take it further by raising the Illovo Flag and KSCL 50 years’ banner on Africa’s highest peak, Mount Kilimanjaro. Translated from the Swahili, the banner reads: 50 YEARS OF KILOMBERO SUGAR PRODUCTION.

• LEADERSHIP DELIVERING GROWTH

  UNDERSCORING the theme of this year’s management conference in KwaZulu-Natal in September, Illovo Sugar (Malawi) once again swept the boards to win Best Country Performance for the third time since the Illovo awards were introduced in 2009. Putting local challenges aside, such as limited and erratic fuel supplies and an acute shortage of foreign currency to name a few, Graham Clark, managing director of Illovo, said that the Malawian operation showed real leadership, first of all getting the basics right and then moving on to get the best out of an adverse situation. “With a record cane crop at Dwangwa and consistently good performance from both factories throughout the 2011/12 season, Malawi added 292 000 tons of sugar to the group total of 1.53 million tons, and contributed 39% to total operating profit of R1 349 million”, said Graham. Strong domestic sales of 168 000 tons were achieved by optimising outbound logistics and, despite the lack of fuel, the new distribution warehouse network resulted in tangible benefits for the company, and group, noting that a further 123 000 tons was exported to the EU and USA. “Overall, this was a very sound performance against the background of challenging times.”

  ACCEPTING the “Best Country Performance” award is Pat Mitchell, country head of Malawi, from Sue Clark, joined by Graham Clark on the left and Ian Parrott (right), regional director central region.

  How they ran 2. Best Factory Performance – Nakambala, Zambia (accepted by Stan Munsamy) 3. Best Agricultural Performance – Maragra, Mozambique (Hans Veenstra) 4. Best Marketing Achievement – Merebank, South Africa (Barry Cornish) 5. Financial Management Award – Nakambala (Lee Elkington) 6. Human Resources Award – Kilombero, Tanzania (Chris van den Berg) 7. Group Safety Award - Maragra (Hans Veenstra) 8. Corporate Office Award – Group Export Marketing/Commercial Team (Mike Edwards) 9. MD’s Award (Special Commendation): Talent Management (Ntokozo Magwaza).

• LEADERSHIP FORUM ‘GOES WITH ILLOVO’

     LEADERSHIP FORUM ‘GOES WITH ILLOVO’

  AROUND 70 country managing directors and top line management from across AB Sugar’s four regions of operation, the UK, China, Spain and Southern Africa, gathered in Durban – the home of Illovo – to discuss the future strategy and direction of the group. This is the third such meeting of this group, with the inaugural gathering in London in 2010, followed by a visit to Seville in Spain last year. In addition to holding the year-end ABS board meeting, the occasion also provides the opportunity to learn about each-other’s businesses and for the transfer of knowledge, information, examples of best-practice, together with the benefit of strengthening the joint network of the AB Sugar group. Following the formal presentation and discussions in the conference room, some of the forum team decided to stay on for a visit to Sezela’s agriculture, factory and downstream operations, shown BELOW at various locations en route.
  Members of the AB Sugar board who attended the forum were: Tony Cheung, MD, AB Sugar China; Ben Hackett, operations & technology director, AB Sugar; Mark Carr, MD, AB Sugar; Graham Clark, MD, Illovo Sugar; Daniel West, strategy & business development director, AB Sugar; Richard Pike, MD, British Sugar; Juan Luis Rivero, MD, AB Azucarera Iberia; Quinton Heath, HR director, AB Sugar; partially obscured (see below): Enrique Campdera, group finance director, AB Sugar (acting).	From left: An AB Sugar China group with Wen Kai, BoTian agriculture and operations director; Tony Cheung, MD; Dana Jiang, finance head; Dawei Liu, HR director; Phil Inskip, CI director; and Gary Teng, corporate affairs head.
  From left: From AB Azucarera Iberia are Felix Santos, legal director; Enrique Campdera, group finance director, AB Sugar (acting); Begona Munoz, HR director; Jose Maria Zarandieta, deputy GM; Pablo Dominguez, agricultural director, and Juan Luis Rivero, MD.	From left: Edgar Bruggemann, agricultural manager, Sezela; Peter Chuah, GM China (South); Salik Khawaja, ABS projects head (commercial); Juan Luis Rivero, MD and Jose Maria Zarandieta, deputy GM, both AB Azucarera Iberia; Phil Inskip, CI director and Dana Jiang, finance head, both AB Sugar China.

• ZAMBIA SUGAR’S WINNING FEELING!

  ZAMBIA SUGAR demonstrated its supremacy in trade promotion exhibitions in Zambia in 2012 by scooping overall best and just about everything big that there was to be won at the Zambia International Trade Fair (ZITF) in Ndola; the Southern Tourism, Agricultural and Commercial Show (STACS) in Livingstone; and the Agricultural and Commercial Show in Lusaka, a total of 11 trophies from three shows. PICTURED are members of the Zambia Sugar show team celebrating when the first trophy (Best Overall Exhibit) was brought to the stand at the 86th Agric & Commercial Show in Lusaka. Emmanuel Simwinga hoists the prize with Fidelis Banda (board chairman) while Kennedy Chomba (quality assurance manager) joins in with Ian Parrott (MD) behind.

• ALL SYSTEMS ‘GO’ AS KILOMBERO’S ETHANOL DISTILLERY MAKES PROGRESS

  CONSTRUCTION of the Illovo Distillers Tanzania Limited (IDTL) ethanol plant continues to progress within budget and marginally ahead of schedule, with overall construction 36% complete by late October 2012. The site’s manpower complement is expected to peak at approximately 400 in March 2013. Emineo from Mauritius were the second contractors to establish site in November 2012 in preparation for installation of a new 5th effect evaporator and two new juice heaters, followed by Actom John Thompson (Boiler Contractor) and ICA (E&I Contractor) who will establish site in March 2013. Engineering design is substantially complete and final procurement is in progress. Illovo Johannesburg is providing some of the procurement and logistical services, with the majority of supply being done by the contractors and UTI/ Freight Forwarders directly to site. The commissioning plan is being formalised by Veneshree Naidu who will initially be the distillery manager for a short period, after which in terms of the localisation plan Timothy Tandika - who was previously engineering manager at K1 - will be appointed to this position. Employment and training of staff to operate the distillery is well advanced and training has commenced at the Merebank and Glendale facilities in South Africa. There are also specific training requirements which will take place in India under PRAJ supervision. The project is expected to be commissioned in May 2013 with commercial production commencing in June 2013.

  CONSTRUCTION of the Caustic Lye preparation and storage tank bases as well as Nitric and Sulphuric acid storage tank bases are seen in the foreground, with the Final Extra Neutral Alcohol (ENA) bulk storage tanks in advanced stages of completion in the background. A delegation comprising members of the IDTL project team and the PRAJ/Shaprio EPC team visited the Mumius Sugar Mill in Kenya to have a look at the 80kl/day ENA plant being commissioned under PRAJ as an EPC contractor, and feedback from this visit was that the installation at Kilombero is of an improved quality which augurs well for the final product.

• TWO OF THE (SAFETY) BEST

  A NUMBER of prestigious safety awards came the way of Illovo Sugar personnel at the annual NOSA national awards. Two notable achievements were:
  ALF UECKERMANN Group risk manager Won the award for “Best Group Risk Manager – Africa Operations”.	MIKE DAVIES Kilombero risk control manager Won the award for “Best Operational Risk Manager – Africa Operations”.

• ESTON SWEEPS THE SAFETY BOARDS

  With their NOSA awards are (from left) Eston’s Sheila Breedt (clinic sister), Eddie Padayachee (Beaumont farm manager) and holding the NOSCAR trophy Earl Chapman (SHERQ manager).

  ESTON has swept the safety boards and brought home a notable haul of NOSA (National Occupational Safety Association) awards, both national and international. At the NOSA international awards banquet on 13 September, Eston’s clinic sister Sheila Breedt won the award for the Best Occupational Health Practitioner of the year (International) and its Beaumont Farm won both the international competition for Sector A (Agriculture, Hunting, Forestry and Fishing) and the first NOSCAR Award. The NOSCAR award is an international award which remains the ultimate symbol of excellence in occupational risk management. To qualify for a NOSCAR rating a company must win the regional and international competition for their category and score more than 95% on the NOSA system, have a DIFR of less than 0.8, have no diagnosis of irreversible occupational health cases and no major environmental incidents. Well done to Sheila, Eddie Padayachee (Beaumont farm manager) and the Beaumont team. Eston’s achievements in the national awards honoured three sites – its syrup plant, Beaumont Farm and the Eston clinic, with top spot in a number of categories. Eston followed this up with the award of a NOSA 5 star grading on 28 September. This is a source of pride as all three Eston entities (Mill, Beaumont Farm and Syrup Plant) are 5 star rated, making it the only South African operation with all entities 5 star graded.

• UBOMBO’S HOSPITAL OPENS NEW LOOK THEATRE

  UBOMBO Sugar Hospital in Swaziland, the oldest hospital within the Illovo group, re-opened a new-look operating theatre in 2012. The event has seen a number of Ubombo employees, their dependants and patients from the surrounding community accessing safe emergency and elective surgical operations on time, closer to their homes and at a relatively low cost. Between April and August 2012, 83 patients requiring major and minor operations were operated on in the new-look theatre. Major operations carried out include caesarian sections, tubal ligations and laparotomies, among others. Surgical referrals to outside doctors and hospitals had been consuming an important fraction of the hospital spending. For example, a normal caesarian section delivery for Ubombo Sugar employees or dependants was charged to the hospital if performed by doctors at private referral hospitals. In many hospitals, running and staffing an operating theatre is one of the most costly patient services provided. Ubombo Sugar’s hospital seized the unique opportunity of reducing financial costs associated with referrals to outside hospitals and specialist doctors by harnessing the ability of its experienced doctors, nurses and support staff to make this expensive function run as efficiently as possible. The theatre endeavour has seen a drop in referrals to other hospitals by close to 40%, which translates to future savings of considerable proportions in the hospital budget. The efficient functioning of the hospital theatre has empowered hospital staff to make a difference and, as a result, they now feel more fulfilled and motivated in their work. In addition, this milestone has seen the hospital live up to Ubombo employees’ expectations of access to quality healthcare services provided by happier and motivated hospital personnel with great efficiency at minimal cost.

  UBOMBO HOSPITAL theatre staff, (from left) Sister Nonkosi Msibi, anaesthetist nurse Last Munukwa, Dr Nompumelelo Thwala, Dr Ernest Peresu and Sister Dumisile Mamba in their revitalised theatre.

• CI SUCCESS: ZAMBIA’S PACKAGING STATION

  THE Continuous Improvement (CI) project technically called PIP (profit improvement project) for the 2kg household sugar packaging line at Nakambala has recorded tremendous results in terms of packing efficiencies and reduction in both down time and cost. This is one of the pilot CI projects that Zambia Sugar embarked on at Nakambala in 2012, and is aimed at maximising potential of the 2kg household sugar packaging line to practically achieve the theoretical pack rate of 300 tons per day. The CI project was necessitated by the difficulties that the packaging team had with the 2kg household packaging lines, with numerous operational and mechanical challenges that reduced output. Assistant production manager–packaging and specials plant Kaoma Bowa says the packaging team had first to identify the teething problems and the status quo of the 2kg household sugar packing line, and then come up with solutions for improving efficiencies and achieving desired results. The biggest challenge was that the 2kg household sugar bales were being damaged, mainly because of operational inefficiencies on the input side of the process. Underlying issues identified as posing challenges included inadequate staffing on the FAWEMA machines, electrical problems, problems of shrink wrap roller conveyors, which were coming out of position quite often, and low optimisation of the roll replacement and the seal bar (which cuts the plastic for baling the 2kg bales) during shrink wrap. Having identified these challenges, the CI team dedicated necessary resources and working on the physical logistics which they had control over. Twelve FAWEMA assistants were employed to improve on damages rejection before shrink wrap. Over a timespan of six weeks, they tackled and solved each problem. By Week 2 the line had achieved a pack rate of 278 tons per day average, which at the time had never been attained before.

  KAOMA BOWA, assistant production manager–packaging and specials plant, explains the successes of the CI project. All in all, the project has delivered and the packing station was able to complete packaging of 2kg household sugar by Week 20, a record pack performance in a season. The normal season takes 29 weeks, which was also the year’s budget target. Kaoma says the CI team has learnt and appreciated the methodology applied on the CI project, which he says can be replicated on other processes within the company. “From this exercise, we are showing a considerable financial benefit.” With the increased pack rate, the factory will be able to pack more 2kg pre-packs and the marketing team will now budget for more volumes of the 2kg in its new markets. The packing station team has been given a project to pack 2 000 tons 2kg household sugar for these markets. This is an absolute financial gain on this project. “The real benefit is that with the extra room we have, we can even increase on packaging for export and local markets without buying an extra machine,” Kaoma said.

• GROWERS’ DAY FOR AMAKHOSI AND IZINDUNA

  ON 2 August, three Amakhosi (traditional leaders) and 38 Indunas (headmen) from the Small-Scale grower areas visited Noodsberg mill. Hosting the event was a first for Noodsberg. The day started with an opening prayer. Noodsberg’s GM Eckard Lucht welcomed the group, then a presentation was given by Fanie Horn (cane procurement officer) on the planned development of 3 400ha that is going to take place within their areas. After tea they went on a mill tour, which was followed by a braai at the Country Club. The purpose of the event was to request these leaders to report back to the people within their areas regarding the proposed development and to have some interaction and building of relationships with the Small-Scale grower leadership.

  The group is pictured happily wearing the “beanies” which Eckard presented to them after they swopped them with the hard hats worn for the mill tour.

• NEW WAREHOUSE WILL STREAMLINE DISTRIBUTION

  THE reliable and cost-effective supply of Illovo’s domestic sugar markets, which in the 2011/12 season comprised 65% of total sugar sales, is of prime importance to the group and this, together with other compelling reasons, was the driving force behind the decision to construct a custom-designed central warehouse in Pietermaritzburg, not far from Durban in KwaZulu-Natal. Logistics and distribution systems, covering vast areas of African urban and rural territory, have been identified as the key factor in optimising Illovo’s domestic market realisations, with the new warehouse aimed at capturing this prize by streamlining storage and distribution to all segments of the South African domestic market at a lower cost. Situated where it is, the new multimillion rand warehouse will serve as a central distribution point between Illovo’s production facilities in KwaZulu-Natal, Noodsberg sugar mill in particular, and the company’s retail and industrial customers across the country. The site is over 12 hectares in size and the warehouse itself is 51000m2 in extent, the size of 10 rugby fields, and to its apex it is nearly 9 storeys high. There will be six 16-tonne overhead gantry cranes built into this state-of-the-art warehouse to assist with the loading and stacking of 1 ton sugar bags, as well as racking to 8 levels high, allowing for 17 500 pallet slots for the storage of palletised sugar. This facility is designed to have an optimal storage of almost 170 000mt.

  Given its approximate 14-month construction period, it is expected to be commissioned early in the 2013/14 South African sugar milling season. The project is being developed in conjunction with the Collins Property Group and, once commissioned, its day-to-day operations will be managed by Illovo's outsourced logistic partners, Barloworld Logistics. Dave Howells, managing director of Illovo Sugar South Africa, says the project will result in substantial efficiency savings in the sugar logistics supply chain. Outside of this, the project brings with it a new dimension in stakeholder relations with Illovo working closely with the neighbouring Sobantu community, who have expressed their desire to be part of the long-term success of the warehouse operations. The engagement to date has included discussion around the support of social upliftment projects in the community and, where employment opportunities arise, the consideration of local residents for these posts.

• C.I. IS NCHALO’S WAY TO GO!

    C.I. IS NCHALO’S WAY TO GO!

  AT Nchalo, CI (Continuous Improvement) was put into action in May 2012. PICTURED are process manager Maclean Debwe and GM Bruce Holmes in front of the “War Room”, where employees can go and list all things affecting their performance negatively in their sections, safety issues that need urgent attention and so on. The Estate has declared war on corruption, war on poor quality standards, war on poor safety standards and many more!

• MARAGRA’S BUSINESS UNDERSTANDING PROGRAMME