Tongaat Hulett, the Southern African sugar producer in business rescue, continues to operate in a constrained environment, and some cane and supplier payments to end-August had to be delayed until after month-end debtor collections to preserve liquidity in the business.
The business-rescue practitioners (BRPs) said in their latest report to creditors on Friday that “headroom remains under pressure from the challenging commercial conditions”.
The company recently avoided liquidation only after an eleventh-hour agreement between the Vision Consortium, the Industrial Development Corporation (IDC) and the BRPs allowed its mills to open for the sugar-cane milling season.
Tongaat Hulett is operating under a R2.75 billion post-commencement finance (PCF) facility agreement with the IDC. The facility has been extended to September 30, 2026.
The BRPs said the PCF continued to support the company’s working-capital requirements and ongoing operations. The facility is subject to tight controls over payments and drawdowns implemented by the IDC.
“Engagements with the IDC regarding future funding requirements remain ongoing,” the BRPs said.
They said structural market pressures, import dynamics, customer hesitancy and supply-side constraints were affecting revenue generation and cash flow.
Strike affects production
An industry-wide strike began on 18 August 2026 and was continuing as at August 31, 2026. The strike followed a wage deadlock after negotiations that began in February 2026 failed to produce an agreement.
“The strike has unfortunately materially impacted operations, receipting and processing of cane from growers, resulting in lower overall production,” the BRPs said.
Sugar imports add to pressure
Continued sugar imports into the South African market are also affecting the company. The BRPs said the imports were being driven by low tariff protection and had displaced locally produced sugar from the domestic market.
The International Trade Administration Commission of South Africa (ITAC) review of the dollar-based reference price (DBRP) underpinning the tariffs was gazetted on August 28, 2026. The review raised the DBRP from $680 a ton to $785 a ton, “falling well short of SASA’s [South African Sugar Association] application for $905/ton”, the BRPs said.
The BRPs said the tariff increase should help moderate the flow of low-priced imported sugar into the Southern African Customs Union market, particularly from major exporters such as Brazil.
However, “it is unlikely on its own to fully curb imports or reverse the significant volumes already imported into the market."
The BRP's said the revised DBRP should slow the pace of future imports and improve the competitiveness of local producers, but additional measures, including a more responsive tariff-adjustment mechanism and consideration of safeguard measures, "may still be necessary to address the structural import challenge facing the industry.”
RGS appeal
The BRPs said they would also oppose an appeal application filed in August 2026 by RGS, another consortium that had previously indicated that it wished to bid for Tongaat Hulett’s sugar businesses.
RGS had sought to have the Vision Consortium’s bid declared invalid but was unsuccessful.
RGS is appealing the dismissal by a full bench of the KwaZulu-Natal Division of the High Court in Durban in July 2026 of the relief it had sought.
The South African Sugar Millers Association said last week about the higher sugar tariff that the industry cannot afford another prolonged period in which the level of protection becomes progressively disconnected from conditions confronting domestic producers.
"The new reference price should be given the opportunity to work, but its impact must be measured urgently and transparently against clear outcomes: import volumes, local market sales, domestic production, mill utilisation, employment and the financial sustainability of growers and millers. If imports continue at levels that materially displace domestic production, South Africa must be prepared to act again," said the association's CEO Jenna Govender in an open letter.
edward.west@nationalmg.co.za