A Billionaire’s Plan to Turn Tongaat Sugar Into Power

SOUTH AFRICA · BUSINESS

Key Facts

—The plan: Burn cane waste for electricity, convert processing CO2 into medical and beverage gas, and turn cane into ethanol for petrol blending. Sugar becomes, in Gumede’s words, the cherry on top.

—Why change: Tongaat lost about $36 million last year as cheap Brazilian imports undercut local producers; over 111,000 tons landed in the first three months of the 2026/27 season alone.

—Scale-up, not shrink: Vision Sugar wants to grow the grower base from roughly 17,500 to more than 30,000 farmers and double the ~50,000 jobs tied to the business.

—The rescue behind it: Gumede’s consortium bought out about $710 million (R11.7 billion) of bank debt and took control of the 134-year-old company in June, with the state IDC alongside.

—Regional muscle: The group runs roughly 140,000 hectares in Zimbabwe and 300,000 in Mozambique; the Zimbabwe operation made over $60 million in the year to March.

—Policy peg: South Africa’s sugar master plan, signed in April, targets a 4.5% ethanol blend in petrol using a 300,000-ton annual sugar surplus.

Robert Gumede, the South African billionaire whose consortium rescued Tongaat Hulett from liquidation, plans to turn the 134-year-old sugar producer into an energy business that squeezes electricity, ethanol and industrial gases from a single cane crop. Sugar itself, he told Semafor, becomes the cherry on top.

Three businesses from one sugarcane crop

The first leg is electricity. Gumede proposes upgrading mill boilers and building biomass-fired generation that sells power into the national grid and directly to municipal buyers such as eThekwini, the metro around Durban.

The second leg processes carbon dioxide and other by-products from sugar milling into medical oxygen and beverage-grade gases. Gumede is eyeing offtake deals with suppliers including Afrox, the continent’s biggest industrial gases group.

The third leg is ethanol for petrol blending. Together the three would relegate sugar from the whole business to a sideline.

None of this is exotic technology. Mills across Brazil and India have powered themselves with cane residue for decades, and grid-scale biomass is a proven business wherever policy allows it.

Why Tongaat Hulett needs a new model

Pure milling no longer pays. Tongaat lost about $36 million last year as a wave of cheap Brazilian imports undercut South African producers.

Industry data show more than 111,000 tons of imported sugar landed in the country in the first three months of the 2026/27 season, close to half the previous season’s total. Growers say subsidised competition from Brazil and Thailand is unbeatable on price alone.

The stakes stretch far beyond one company. About 250,000 livelihoods tied to the cane economy across KwaZulu-Natal and Mpumalanga were at risk when liquidation loomed, because cane degrades quickly and cannot travel far to alternative mills.

The Brazil lesson

Gumede’s model is, ironically, the competitor’s playbook. Brazil turns cane into vehicle ethanol at vast scale and burns the fibrous residue known as bagasse to generate electricity, as does Thailand.

Zimbabwe has blended ethanol into its petrol since 1975. South Africa, by contrast, has used almost none.

That is changing. The government’s latest sugar master plan, signed in April, targets a 4.5 percent ethanol blend built on a 300,000-ton annual surplus, a policy shift Gumede says his plan is designed to exploit.

Who owns what after the rescue

Vision Sugar took control of Tongaat in June, ending a rescue saga that ran for months. The consortium had bought out about $710 million, or R11.7 billion, of debt owed to the company’s 13 lender banks, making itself the largest secured creditor.

Under the final deal, Gumede’s Guma Group and the state-owned Industrial Development Corporation hold 68 percent of the South African operations. Zimbabwean dealmaker Rute Moyo controls 64 percent of the Zimbabwe business, and Mozambique’s government holds 15 percent of the local unit.

The ownership transfer must be completed by the end of September. Gumede also wants trade defences, telling regional leaders the region must protect rural livelihoods the way larger economies do, according to Billionaires.Africa.

Can he pay for it?

Gumede argues the financing is manageable because the regional operations already make money. The group farms roughly 140,000 hectares in Zimbabwe and 300,000 in Mozambique, and the Zimbabwe business earned more than $60 million in the year to March.

He plans to expand the grower base from about 17,500 farmers to more than 30,000 and to double the roughly 50,000 jobs tied to the business. It is a bet that scale plus diversification beats retreat.

Execution risk is real, and Gumede himself faces a contested state claim over a pandemic-era contract. Whether the pivot works will hinge on Pretoria moving on tariffs and biofuel rules as much as on the mills themselves.

Frequently asked questions

What is the new plan for Tongaat Hulett?

Owner Robert Gumede plans three revenue streams from sugarcane: biomass electricity sold to the grid and municipalities, industrial and medical gases from processing CO2, and ethanol for petrol blending.

Why is Tongaat Hulett in trouble?

The company lost about $36 million last year as cheap imports, led by Brazilian sugar, undercut local producers; over 111,000 tons arrived in the first three months of the 2026/27 season.

Who owns Tongaat Hulett now?

Robert Gumede’s Guma Group and South Africa’s Industrial Development Corporation hold 68% of the South African operations; Rute Moyo controls 64% of the Zimbabwe business and Mozambique’s state holds 15% of the local unit.

What happens next?

The ownership transfer must be completed by the end of September 2026, while the government’s April sugar master plan targets a 4.5% ethanol blend that underpins the energy strategy.

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