Imperial Sugar enters Cargill cooperation talks
According to the company, the talks with LSR, a collaboration between Cargill and the Sugar Growers & Refiners group, could lead to the construction of an state-of-the-art refinery adjacent to one of Imperial’s existing plants in Gramercy, Louisiana.
The discussions are centered on the potential benefits of the scheme for the three parties involved, particularly in terms of the potential cost benefits in constructing and running the refinery over a long-term period.
Imperial sugar emphasized that the deal may allow it to step up its focus on product development in order to target a number of segments such as retail and organic markets, as well as strengthening its presence in Mexico.
As part of the talks, which the company stresses are not a cast iron guarantee of a possible deal, in return for one third stake in the joint venture, Imperial would contribute the majority of its neighboring Gramercy refinery operations to LSR.
Imperial Sugar said that it would expect to retain its small bag packaging operations at the site, which it uses to supply retail and food service businesses.
The company’s other refinery in Port Wentworth, Georgia, will be exempt from the joint venture under the existing plans.
John Sheptor, president and chief executive officer of Imperial Sugar, said that any potential deal would serve as an extension to what the company called a longstanding relationship with the producers and mill owners of Sugar Growers & Refiners.
In addition, Sheptor claimed that the combination of Cargill’s and its own experience in refining and marketing sugar could effectively ensure a more efficient supply chain for the product from the cane right up to distribution.
“A potential strategic alliance with LSR would provide economies of scale while providing a larger integrated network to the marketplace,” he stated. “It would also allow us to secure sufficient raw sugar supply for Gramercy while the refinery is being built and also benefit the expanded joint venture in the longer term.”