Canal Sugar, a $1 billion joint venture between UAE and Egypt investors, will start production next year with the aim to bridge 80 percent of Egypt’s current sugar gap.
It’s located in Minya Governorate of Egypt. Egypt produces around 2.5 million tonnes of sugar annually but needs 3.3 million tonnes.
Jamal Al Ghurair, managing director of the UAE-based Al Khaleej Sugar, and other UAE investors will hold 70 percent stake in the sugar refinery while the rest of 30 percent will be controlled by Egypt’s Al Ahli Capital Holding.
“The refinery will produce 900,000 metric tonnes of white sugar per year. The project will see desert land reclamation of 77,000 hectares, of which 50,000 hectares will be irrigated with centre pivot irrigation system,” Islam Salem, managing director and CEO of Canal Sugar, told reporters during a media roundtable on the sidelines of Dubai Sugar Conference 2020.
Canal Sugar will produce 400,000 tonnes a year of white sugar when it starts production in the 2021 season, the chief executive said on Monday.
Construction of the company’s sugar beet factory will be completed this year and the project will reach full capacity of 900,000 tonnes of white sugar a year in 2023, Salem said.
Planting will begin in late October for the 2021 harvest. Once the project’s full agricultural capacity is reached, it will produce half of its sugar from the beets it grows, with the remainder provided by local farmers, Salem said.
The west Minya project aims to establish the world’s largest beet sugar plant and the sugar produced will be sold in the local Egyptian market, which faces a deficit, Salem said.
“Production is aimed at the local market as there is a deficit in the country, so it makes sense to be in the local market,” Salem told reporters. “But there are good economic chances for export to neighboring countries,” he added.
Globally, one of the key issues facing the sugar market was a very large surplus of sugar in 2017-18 and 2018-19. While 2019-20 should see a statistical deficit, the overhang of the surplus driven by India has been a drag on the market. While several countries have introduced sugar taxes, their impact has been uneven and their efficacy in reducing sugar consumption on a global basis has been debatable.
“The demand is growing in Egypt due to population growth as two million Egyptians are added every,” he said.
Salem said they had drilled 120 wells with very good yields of quality water and 25,000-30,000 acres of land has been prepared for agriculture.
The company has already obtained $165 million of bridge loan and is negotiating to raise more funds with local and international banks, he added.
“Al Ahli Capital Holding is also financial advisor and we believe the funding will be finalized in the next couple of months,” he said.