Zimbabwe Stock Exchange listed Starafrica’s subsidiary Gold Star has temporarily closed its Harare refinery and sent employees on indefinite leave, in protest to Tongaat Huletts price increase and onerous trading terms.
In a statement, the company’s Chief Executive Robson Nyabadza cited high costs of the raw sugar effected by the Zimbabwe Sugar Sales (Private) Limited (ZSS) on 9 February 2023.
Hippo Valley Estates’ Tongaat Huletts are the main suppliers of raw sugar through what observers regard as a monopoly in the industry.
“Kindly be advised that the plant at Goldstar Sugars (GSS) will be closed for a week from Monday 13 February 2023 to Sunday 19 February 2023 due to a lack of raw sugar,” read the statement.
“The outage of raw sugar is a result of the raw sugar price increase effected by the Zimbabwe Sugar Sales (Private) Limited (ZSS) on 9 February 2023, which makes it difficult for the company to operate the refinery viably as well as the onerous trading terms, that ZSS has imposed, which have constrained the supply of raw sugar to the extent that the refinery is experiencing frequent raw sugar stockouts.
“All employees shall take leave with effect from 13 February 2023 and report for duty on 20 February 2023, except those doing debt collection and other specified and essential activities as shall be advised by their line managers.”
In an interview with Nehanda Radio, analyst Pride Mkono stated a number of factors that could have led to the temporary suspension of Gold Star operations.
He cited shortage of electricity and manipulation of raw sugar prices by Tongaat Huletts due to the company’s monopoly in the sugar industry.
“It would seem that the company is facing serious headwinds in terms of its production costs which are driven by high prices of raw materials.
“While it is not clear why suppliers have increased the price of raw materials, we do know that the suppliers are mainly Hippo Valley which itself is part of the Tongaat Huletts family which is of sugar production.
“So there could be a market dynamic where there is dominant competition from those that control the primary production of sugarcane. We not also rule out the issues around energy as they have highlighted the issue of high cost of production.
“We have been facing electricity challenges recently and those are some of the factors that could affect that. But generally, our economic environment is not competitive because most of the industries are dominated by one player and where there is a monopoly or oligopoly, there can be price manipulation,” he said.
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