A Billionaire’s Plan to Turn Tongaat Sugar Into Power

SOUTH AFRICA · BUSINESS

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.

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