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DJ CORRECT: Zambia Sugar Expansion Project Boosts Illovo Sugar -Co

Posted on: Thu, 19 Nov 2009 06:19:00 EST

Symbols: ZBSGF, ILVOF

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Nov 19, 2009 (Dow Jones Commodities News via Comtex) --
ZBSGF | Quote | Chart | News | PowerRating -- ("UPDATE: Zambia Sugar Expansion Project Boosts Illovo Sugar -Co," at 1049 GMT, misspelt the name of Illovo in the first and fifith paragraphs. This error was also made in a story at 1006 GMT. The correct version follows:)

DOW JONES NEWSWIRES

The expansion project at Zambia's largest sugar producer, Zambia Sugar PLC has boosted the earnings of South Africa-based Illovo Sugar (ILV.JO), which holds a majority stake in the company, Illovo said Thursday.

In a report, Illovo, which holds an 81.6% stake in the Zambia Sugar, said the impact of improved world sugar prices, increased sugar production in Zambia following the completion of plant and farmland expansion and increased sugar production and favorable sugar sales in Tanzania have all combined to boost the company's operating profit for the period ending in September by 35% on the year.

The expansion project in Zambia has since boosted Zambia Sugar's annual capacity to 440,000 metric tons from 250,000 tons. The project came on stream in April. However, due to unfavorable weather conditions, Zambia Sugar's 2009 output is projected to reach 350,000 tons from an earlier forecast of 420,000 tons.

"In Zambia, unseasonal rains, which fell early in the season, disrupted operations and impacted negatively on the sucrose content in cane, but since then more normal conditions have prevailed," the company said.

Illovo operates in South Africa, Malawi, Zambia, Tanzania, Swaziland and Mozambique.

The company said sugar production across its entire operations is projected to increase to 1.78 million tons this year, around 200,000 tons above last year's output.

In Zambia, Illovo completed a rights issue that raised $50 million in August, resulting in Illovo's stake in Zambia Sugar falling to 81.6% from 89.7%. The proceeds were used to reduce borrowings related to the acquisition of the Nanga Farms and the expansion project. The 9,000-hectare Nanga currently produces 325 000 tons cane a year with the potential to further increase output.

Zambia Sugar exports around 50% of its annual sugar output to South Africa and the European Union.

Illovo is a unit of London-listed Associated British Foods PLC (ABF.LN).

-By Nicholas Bariyo, contributing to Dow Jones Newswires; +256 75-262 4615; bariyonic@yahoo.co.uk

(END) Dow Jones Newswires

11-19-09 0619ET

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