A three-way joint venture to build a $145m sugar refinery in Gramercy, Louisiana has been finalized by Cargill, the Imperial Sugar Company and Sugar Growers and Refiners (SUGAR).
Construction of the new plant, next to Imperial Sugar’s existing Gramercy refinery will begin immediately, Imperial said, and the facility is expected to process about a million tonnes of sugar every year, mainly for the US market. In an equal three-way split, the partners have each invested $30m to finance the initial construction and operating costs for the venture, to be known as Louisiana Sugar Refining, while another $100m has been secured through a tax-exempt bond offering that takes advantage of the Gulf Opportunity Zone that was set up to help the area recover from Hurricanes Katrina and Rita.
The endeavor is expected to create 500 construction jobs, and a further 145 permanent positions once the refinery starts production, in approximately 18 to 24 months. Imperial’s contribution includes the existing refinery assets, including about 207 acres of land.
Imperial Sugar’s president and CEO John Sheptor said: “This transaction enables Imperial to retire its existing refinery with dated technology for a share of the new state-of-the art refinery without a significant capital outlay by Imperial...This joint venture secures a source of raw sugar and assures the viability of refining operations in Gramercy for generations to come.
“I am very pleased with Imperial’s participation in the LSR venture. We look forward to continuing our successful relationship with SUGAR and working collaboratively with Cargill.”
Imperial’s existing refinery in Gramercy will continue production in the meantime, allowing an easier transition toward supply coming from the new plant.
Cargill has said that expanding into US sugar refining is part of its long-term strategy to become a “one-stop sweetener provider” for food manufacturers.
Talks began between the three parties in October 2008, with a focus on the potential advantages of the scheme, particularly in terms of cost benefits in constructing and running the refinery over a long-term period.