TA Holdings is on course to start its importation of ammonia for Sable Chemicals by the end of the year, CEO Gavin Sainsbury said this week.
Sainsbury told shareholders at an annual general meeting this week that the group could not import ammonia in the first quarter due to working capital constraints.
“There were liquidity constraints in the supply chain. Coupled with power cuts, production in the quarter was 78% below last year’s production,” he said.
Earlier in the year, the company said Sable Chemicals would move to full importation of ammonia by the end of 2012, a move which would end the company’s reliance on electricity for the manufacture of ammonium nitrate fertiliser.
Sainsbury said the change was only an interim strategy as the coal gas system would take possibly five years, before it could come on board.
“We plan to build imports to as near capacity as possible until the advent of coal gas in five years,” he said. The electrolysis plant would be mothballed. A feasibility study of the coal gas project was completed in November last year and the results proved that the project was technically and economically viable.
Sainsbury noted that full importation had in fact been the original model of the business in 1969, which was then changed in 1972 when the company started manufacturing its own ammonia.
Electricity was the major drag for the company and even though an agreement had been reached on a viable tariff for Sable with government for 2012, this was not viable as it would only just ensure that the company merely broke even.
Sainsbury said May and June performances were however above budget.
Hotel revenues were up 10% due to improved revenues and occupancies. At Cresta Zimbabwe, work had already started on the refurbishment of the Cresta Lodge and Conference Centre and this should impact positively on RevPar for the group once completed.
Cresta will spend US$6 million on an infrastructural development project, which will see the group refurbish its Harare lodge and construct a conference centre. Chief operating officer Glenn Stutchbury said the conference centre would be a 450-seater facility, adding it would be completed in the next four months while the rest of the project would be completed within a year. A total 171 hotel rooms would be refurbished together with the reception, bar and restaurant.
The group said further increases in RevPar were budgeted for all units in the division this year.
In Botswana, Cresta Marakanelo’s revenue grew 4% and its profitability had been affected by the poor performance at Cresta Mowana. Good growth is forecast in RevPar at Cresta Marakenelo, following the completion of the refurbishment of Mowana lodge in Chobe in January this year and the opening of a new unit in Lusaka, Zambia.
Group revenue in the first quarter amounted to US$14,8 million, which was a 15% growth on the same period last year.