Poland's leading sugar producer KSC is looking into buying a foreign sugarcane producer and setting up a cane refinery in Poland in a move to diversify its beet-dominated output, KSC CEO Marcin Kulicki said on Tuesday. The investment is aimed at diversifying risk for KSC and preparing production capacities ahead of the European Union's sugar market liberalisation planned for 2015.
"We are at an early stage of thinking of about investing in sugarcane to diversify our operations," Kulicki told Reuters in an interview authorised for publication on Tuesday. "We are considering building a sugarcane refinery next to one of our sugar plants at the cost of around 50 million zlotys ($15.92 million)." Poland consumes about 1.6 million tonnes of sugar annually, while its production is capped by the EU at over 1.4 million tonnes, or nine percent of Europe's total sugar output. At the moment KSC makes 0.55 million tonnes of sugar annually from beet, a plant common in Poland, but is running below its maximum capacities due to the EU restrictions.
The Polish producer earlier this year bought a small sugar plant in Moldova and is now seeking acquisition targets with capacities of up to 0.3 million tonnes in Ukraine, Russia and Belarus, where it is also considering a greenfield investment. Kulicki added KSC would be able to increase output capacity by up to 30 percent from the current level of around 0.6 million tonnes through upgrades of existing facilities once the European Union decides to abolish quotas. KSC is the largest market player in Poland with three German companies Nordzucker, Pfeifer & Langen and Suedzucker as its main competitors, but Kulicki is sceptical that a consolidation trend in Europe will repeat itself in Poland.
"As long as the sugar business remains as profitable as it is at the moment, we will not see any consolidation in Poland. Neither us, nor the German players, show inclination to be sold," he said. Thanks to favourable conditions for sugarbeet cultivation in Poland this season KSC expects a surplus of production over its quota and it will seek to export the surplus outside of the EU. "Both production in tonnes as well as sugar content are very good, much better than last year. We plan that the surplus will amount to some 80,000 tonnes, that is 15 percent more than a year ago," Kulicki said.
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