AgriNova Sugar SA Business Plan › Section 7 › Operations & Production Strategy

7.1 Operational Overview

AgriNova’s operations span agricultural production (sugarcane),
industrial processing (sugar, ethanol, feed, starch), property
development and energy generation. This section sets out the operating
model, capacity ramp, technology choices, supply-chain architecture and
key performance indicators that govern the platform.

Figure 19

7.2 Sugarcane Cultivation

AgriNova will source cane from three channels: (a) owned estates
(~40% of feedstock by Year 4), (b) the outgrower programme (~45%), and
(c) open-market growers (~15%). Owned estates provide the operational
baseline of feedstock reliability; outgrower cane is the engine of
expansion; open-market cane is the marginal swing component.

Owned estates

Owned estates are concentrated in two clusters: Cluster A
(KwaZulu-Natal North Coast, ~5,400 ha) is rain-fed and operates on a
12-month cane cycle with a 30–38 week harvest. Cluster B (Mpumalanga
Lowveld, ~3,200 ha) is irrigated under licensed water rights and
supports higher yields (typical 80–95 t/ha vs. 55–65 t/ha for KZN
rain-fed).

Outgrower programme

AgriNova will integrate 5,000 smallholders in Year 1, scaling to
20,000+ by Year 5. Each grower farms an average 4–18 ha. The programme
provides:

• Free seed cane (NCo376, N12, N31, N41 varieties — sourced via
  SASRI nurseries)
• Input financing (fertiliser, herbicide, mechanical land
  preparation), repaid via cane deliveries at a 2.5% margin over
  commercial paper rates
• Technical extension services delivered by a dedicated 22-person
  agronomy team
• Minimum-price guarantees during commodity downturns (capped at
  12% below SASA notional)
• Cane transport on a tariff-managed contract basis, executed by
  approved hauliers
• Equity participation via the AgriNova Outgrower Development
  Trust

Cane payment system

All cane is paid for under the SASA Recoverable Value (RV) system.
The Cane Testing Service (CTS) at each mill measures sucrose content,
fibre and non-sucrose impurities; payment is made on a R/RV-percent
basis with seasonal adjustments. The 64:36 grower-miller industry split
applies. AgriNova’s experience-based assumption is that integrated
outgrower cane delivers RV of 11.0–11.6%, slightly below the 11.7%
national average, but rising to 11.9% by Year 5 as varietal optimisation
and harvest scheduling improve.

7.3 Milling Operations

Mill 1 (KwaZulu-Natal) and Mill 2 (Mpumalanga) are existing
facilities being acquired and upgraded. The combined design crushing
capacity at run-rate is 3.0 Mt of cane p.a., yielding approximately
351,000 tons of sugar at the target 11.7% recovery.

Capital expenditure on mill upgrades

Mill upgrades are sequenced over Years 1–3 and target three primary
outcomes: (i) lift sugar recovery from acquired-state ~11.4% to 11.8%
via diffuser, evaporator and centrifuge upgrades; (ii) lift
bagasse-export capability through high-pressure boiler and turbine
upgrades, supporting 60 MW grid-export cogeneration; and (iii) install
instrumentation, SCADA, and predictive-maintenance technology to reduce
unplanned downtime by 35%. Total mill upgrade capex is budgeted at ZAR
1.4 billion across the two facilities.

7.4 Bio-Industrial Operations

Ethanol plant

The ethanol plant is sized at 80 million litres per annum of
anhydrous fuel-grade ethanol. The dual-feed design — molasses
(C-molasses from both mills) and direct cane juice (from a fraction of
mill output during periods of unfavourable sugar pricing) — provides
operational flexibility to switch between sugar and ethanol output as
relative pricing dictates. Reference projects in southern Africa (e.g.,
Sierra Leone, Mozambique) suggest a real capital cost of ZAR 2.0–2.4
billion for an 80 ML plant of this configuration.

The plant configuration includes:

• Continuous fermentation (Melle-Boinot process, 8 fermenters of
  800 m³ each)
• Multi-stage distillation column (production of 96% hydrous
  ethanol)
• Molecular sieve dehydration (production of 99.5%+ anhydrous
  ethanol)
• On-site storage of 12 ML (45 days at average production
  rate)
• Dispatch by tanker truck and rail to fuel-blending
  terminals

Animal feed mill

The animal feed mill produces 250,000 tons p.a. of compound feed,
ruminant supplements and molasses-based liquid feeds. Feedstock is
sourced 35% from internal molasses, 50% from contracted maize
procurement (Free State suppliers) and 15% from soya bean meal and
additives. The mill is co-located with Mill 1 in KZN to minimise
inter-site logistics.

Starch and glucose line

The starch and glucose line is sized at 80,000 tons p.a. of
food-grade starch and 65,000 tons p.a. of glucose syrup. Feedstock is
contracted maize from a 250 km radius of the production site. Starch and
glucose are higher-margin products than commodity sugar and serve as a
hedge against sugar-price volatility for the food-and-beverage offtake
portfolio.

7.5 Energy Operations

Bagasse cogeneration (60 MW)

Bagasse (the fibrous residue of cane after juice extraction) is the
primary fuel for combined heat-and-power generation at both mills. Each
mill currently operates with a low-pressure (21 bar) boiler that
recycles bagasse for process steam and limited electricity. The Plan
upgrades both mills to high-pressure (87 bar) boilers and
condensing-extraction turbines, enabling 60 MW of dispatchable power
export to the grid (after deducting in-house consumption).

Capital cost is approximately ZAR 1.6 billion across the two mills.
Reference benchmarks from techno-economic studies on the South African
sugar industry indicate a typical bagasse-cogen upgrade for a 300 t/h
crushing plant runs USD 17–22 million per facility. AgriNova’s capex
budget incorporates a 25% contingency above benchmark.

Solar utility (80 MW)

The solar farm is an 80 MW DC ground-mounted PV plant on
AgriNova-owned land in Mpumalanga. Capital cost: ZAR 0.9 billion.
Capacity factor: 24%. Annual generation: 168 GWh. Off-take: 20-year
corporate PPA with sleeved municipal back-up; tariff R1.05/kWh fixed in
real terms.

7.6 Land & Property Operations

The Land & Property Division is structured as a separate
operating subsidiary with its own management team, capital allocation
discipline and project-finance framework. Each property project is
evaluated on a stand-alone NPV basis with a hurdle rate of 18% (real,
post-tax) and is funded with a project-specific debt-equity stack.

Phase A (mixed-use estates, KZN North Coast): 1,200 ha programmed for
re-zoning, bulk infrastructure provision and serviced-plot release
across 6 years. Estimated gross development value: R7.4 billion.

Phase B (industrial / logistics park, Richards Bay): 280 ha
programmed for industrial re-zoning, port-linked logistics build-out and
selective rental retention. Estimated gross development value: R3.2
billion.

7.7 Supply Chain & Logistics

Cane is harvested manually and mechanically (mix evolves toward 60:40
mechanical by Year 5) and transported by certified hauliers under
tariff-managed contracts. Average haul distance from grower to mill is
32 km in KZN and 28 km in Mpumalanga. Sugar is dispatched in 50-kg bags,
jumbo bags (1,000 kg), and bulk in 25-ton trucks; export sugar moves by
rail to Durban and Richards Bay ports.

Inbound logistics (fertiliser, agrochemicals, packaging, mill spares)
follow standard procurement-to-pay processes managed centrally from the
Group’s Durban head office, with regional warehousing at each mill.

7.8 Technology and Information Systems

AgriNova’s technology architecture is built on three layers: (a) an
enterprise resource planning (ERP) backbone (SAP S/4HANA Public Cloud),
(b) an operational technology layer (mill SCADA + outgrower mobile app),
and (c) a data analytics and AI layer (predictive maintenance, yield
forecasting, ESG reporting).

Cybersecurity is governed under a NIST CSF-aligned framework with
24/7 SOC monitoring outsourced to a tier-1 provider. Disaster recovery
is structured around dual-region hosting in Cape Town and
Johannesburg.

7.9 Quality and Certifications

Operational certifications targeted within the first 36 months of
operation:

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