Updated | Tongaat Hulett lifeline sparks calls to fix SA’s struggling sugar industry
The breakthrough was reached on Tuesday — the same day a liquidation application was due to be heard in the High Court in Durban.
The rescue of Tongaat Hulett from liquidation has brought relief to thousands of growers, workers and businesses dependent on the sugar giant, but industry stakeholders warn that the focus must now shift to deeper structural problems threatening the long-term viability of South Africa’s sugar sector — among them cheap imports, declining productivity and rising production costs.
A last-minute agreement between Tongaat Hulett’s Business Rescue Practitioners (BRPs), the Industrial Development Corporation (IDC) and the Vision Group averted the liquidation of the embattled sugar producer, providing a lifeline to one of southern Africa’s oldest agricultural businesses.
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The breakthrough was reached on Tuesday — the same day a liquidation application was due to be heard in the High Court in Durban.
The agreement brings to an end months of uncertainty that had threatened the future of the 134-year-old company and placed thousands of jobs at risk.
The liquidation process was initiated in February after disagreements between the IDC and Vision Group over funding timelines required to implement the approved business rescue plan.
The new deal establishes a framework aimed at preserving the rescue process, maintaining operations and safeguarding an estimated 250 000 jobs linked to the sugar industry value chain in South Africa and neighbouring countries.
Central to it is a major restructuring of the IDC’s financial support, with the state-owned development finance institution agreeing to convert its post-commencement finance into an equity stake.
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The Vision Group — which includes South African billionaire Robert Gumede and Zimbabwean investor Rute Moyo — will provide funding to settle outstanding creditor claims, including obligations owed to the South African Sugar Association.
The parties will now finalise agreements to transfer Tongaat Hulett’s South African operations and regional assets to Vision Group, which has also committed to investing in milling infrastructure, supporting independent growers and exploring opportunities such as biofuels.
Gumede welcomed the IDC’s participation, saying risk-sharing with development finance institutions had always formed part of the Vision Group’s strategy.
While SA Canegrowers welcomed the withdrawal of the liquidation application, it warned that financial risks would threaten the company as a going concern unless issues of productivity, profitability and sustainability were addressed.
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“We hope its mills and refinery can now focus on operating without interruption. More than 17 500 sugarcane growers rely on Tongaat,” SA Canegrowers chairperson Higgins Mdluli said.
The BRPs echoed the concern. “Unless these challenges are urgently addressed, they will continue to pose a material risk not only to Tongaat Hulett’s recovery but to the long-term sustainability of the broader industry,” they said.
Tongaat Hulett has faced severe financial difficulties since a 2019 accounting scandal triggered a prolonged period of instability.
The company entered business rescue in 2022, with Vision Group subsequently acquiring R11,7 billion worth of debt from lenders.
