Associated British Foods makes investment in China''s beet sugar industry

Associated British Foods plc (ABF), the international food, ingredients and retail group, has today announced that it has reached agreement with the Hebei Tian Lu Sugar Group (Tian Lu), based in the north east of China, to form a joint venture.

The formation of the joint venture, to be called Bo Tian, is subject to government approval with clearance anticipated by the end of September.

Tian Lu will contribute its existing beet sugar business to the joint venture and ABF will contribute some 70m to fund our plans for future development and expansion. ABF will hold 51 per cent and Tian Lu will hold the remaining 49 per cent of the joint venture.

The Chinese beet sugar industry is centred in the north east where the provinces have abundant high quality arable land with ideal weather conditions to produce high sugar content in the beet. Tian Lu operates four beet sugar factories: Wangkui and Yian in Heilongjiang province, Zhangbei in Hebei province and Qianqi in Inner Mongolia. Sugar production was 145,000 tonnes last year with sales of 34 million.

A significant increase in sugar production is planned. There is a major opportunity to improve beet yields by the application of British Sugars European beet sugar expertise through better agricultural practices and technology transfer. In addition, refinery capacity will be increased through investment and efficiency improvements.

The much larger cane sugar industry is centred in southern China. British Sugar has four cane sugar refineries in Guangxi province. Following years of investment in refinery capacity and efficiency and agricultural development, sugar production will exceed 500,000 tonnes this financial year.

George Weston, chief executive of Associated British Foods, said, "This acquisition represents another exciting development for us in China. Our experience in operating cane sugar factories in southern China, combined with our skills as the lowest cost beet sugar producer in Europe will enable us to introduce improvements quickly and efficiently to Chinas beet sugar industry."