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FIJI SUGAR CORPORATION AND INDUSTRY REVIVAL. Presentation. Deloitte Recommendations Objectives Agreed Changes Three-Block Recovery Approach Strategies Personal Drivers Projection Challenges Medium Term Strategies. Deloitte Recommendations. Proposal 1 – Cane Replanting Programme
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Presentation • Deloitte Recommendations • Objectives • Agreed Changes • Three-Block Recovery Approach • Strategies • Personal Drivers • Projection • Challenges • Medium Term Strategies
Deloitte Recommendations • Proposal 1 – Cane Replanting Programme • Detail Business Plan being prepared • Indentify Low-yield Farms / Areas • Involvement of Tribunal, SRIF, SPF, SCGC, CGF, FDB and FSC • Revolving Fund Facility • Advisory and Monitoring • Proposal 2 - Cane Quality Payment System • Deferred to 2012 Season • Further review of NRI System • Review of Core Sampling • Lessons from ASR Trails and Working Systems
Deloitte Recommendations • Proposal 3 – Single Extension Programme • Hand-in-hand with Proposal 1 • Proposal 4 – Aggregation of Small Farms • Hand-in-hand with Proposal 1 • Identification underway (Both yield and area) • Proposal 5 & 6– FSC to Harvest and Deliver Cane • Need for Legislative change • Will be implemented in 2012
Objectives • WITHIN TWO YEARS, RETURN THE CANE INDUSTRY TO LONG TERM COMMERCIAL VIABILITY • WITHIN TWO YEARS RETURN FIJI SUGAR CORPORATION TO PROFITABILITY
Agreed Changes • Delist FSC from SPSE • Came into effect from 24th February 2011. • Government to Acquire 100% of FSC • Delivery under FSC Control • Target for 2012 Crushing Season • Restructure of FSC Organization • From Hierarchical to Matrix Structure • Backward Integration
Block C Strategy • Products • Raw Sugar • Molasses • Ethanol • Refined Sugar • Electricity • Multiple Customers • Partnering Arrangement with Customers
Raw Sugar Pricing • Existing Price (Partially Revised) • Approx. US$0.22 cents per lb • Negotiated Price for 2011/12 Season • Fixed for 12 months. • Better than present World Forward Price ($0.22/lb) • Possible Pol premium
Tate & Lyle Partnering • 10 Target Areas • Full involvement in Preparing Mills for Crushing Season • Preventive Maintenance / Continuous Improvement • Comprehensive Inspection of Boilers • Water Management • Inspection, maintenance / replacement of Valves • Cane feeders and Mill Setting • Cane delivery logistics • Cane planting support programme • Mill management best practice / mentoring • Improvement to Extension Services
EOI • Ethanol • Approximately 8 Companies • Being reviewed • Refinery and Packaging • Approximately 5 Companies • Being reviewed • Electricity Generation • Objective to meet FSC energy requirements AND additional revenue from Electricity sales • Replace of FSC dedicated Energy Center - $80m • Steam and Electricity facility - $130m • Incremental Revenue - $35m per annum from Electricity
Steam & Electricity Partnering • FEA • Long term power purchase agreement • Take-or-pay arrangement • Wheeling Arrangement • Vatukoula Gold Mines Ltd • Off-take Agreement • Contribution to Feasibility Study • Financing Options • FSC • Product Exchange Agreement • Financing Options
Block B Strategy • Reliability and Production Consistency • Very Targeted 2011 Maintenance Master Plan • Not Doing Maintenance BUT Preparing the Mills for Crushing • Reduce Crushing Rate to Manageable Levels • Remove Destructive Competition • Special Assistance from Tate & Lyle Technicians • Losses and Wastage • Better Milling to reduce Juice in Bagasse • Re-cycle Spillage • Production Cost • Implement targeted Cost Effectiveness • Value-driven Expenditure • Partnering Stockholding with Equipment Suppliers
Block A Strategy • Increase Quality Cane Production • Helping Hand for New Growers • Improve Quality Cane Yield • Revolving Fund availability • Premium Payment for Quality Cane • Introduction of “cane quality payment” • FSC Backward Integrate • Acquire new and un-used Cane Plantation
Personal “Drivers” • Commercial & Economic Viability • Stand on our own 2 feet • No Hand-out but Hand-up • Succession Planning • Allow Senior Managers to Step up • Training Program through Hands-on Exchange • Seamless Relationship • Suppliers / Manufacturers / Customers
Challenges • Mindset • Very Traditional and Institutional • Sugar vs Cane • Destructive Behaviour • Ego-driven Outputs • Stressing of machineries • Money will Fix Everything • Over $100m spent in the last 3 years • Always Someone else’s Fault • Everyone is a Sugar Expert • Lack of Good Competent People
Medium Term Strategy • Ethanol Plant • Ability to switch from Sugar (& Molasses) to Ethanol • Sugar Refinery and Packaging • Value-adding for Pacific Consumption • Satellite Juicing Stations • Localized Extraction of Juice • Conversion to Syrup • Briquetting of Bagasse
Vinaka Thank You