The Industrial Development Corporation (IDC) has bought embattled sugar producer Tongaat Hulett an extra two months before it could be wound down, giving more than 15,000 small-scale farmers who heavily rely on it for income and the 2,500 workers who work for it breathing room.
The reprieve came on the eve of a high-stakes liquidation application brought by the group’s business rescue practitioners (BRPs), an application that was supposed to be heard on Thursday.
The IDC, a major creditor, provided an immediate financial lifeline of R200m to keep the company afloat until the end of June, with the next two months key in finding a long-term solution for the group.
Minister of trade, industry and competition Parks Tau, whom the IDC reports to, is opposed to the demise of Tongaat Hulett.
The move by the IDC saw the KwaZulu-Natal High Court postpone the liquidation application, giving the parties a chance to find a long-term solution for the company that has been in business rescue for more than three years.
Tongaat entered business rescue in October 2022 following severe historic accounting irregularities, financial misstatements and governance failures under former senior management, who are facing criminal charges.
The IDC has already provided about R2.3bn to Tongaat Hulett’s business rescue process — with the latest funding taking its post-commencement funding (PCF) to R2.5bn. The postponement of the liquidation process was supported by the company’s insolvency experts, the IDC, the Vision Consortium and the SA Canegrowers.
In granting the postponement of the liquidation application brought by the BRPs in February, the KwaZulu-Natal high court acknowledged that the company was the “lifeblood” of the province’s economy.
The liquidation of Tongaat Hulett affects the entire sugar industry and it is a direct threat to tens of thousands of rural jobs and livelihoods. For SA Canegrowers, safeguarding these communities must come first.
— Higgins Mdluli, chair of SA Canegrowers
Tongaat Hulett’s BRPs welcomed the last-minute finding by the IDC but cautioned this does not mean the company’s long-term future is settled.
“While the PCF developments address the company’s immediate short-term liquidity requirements, the BRPs have previously indicated that a further requirement for any withdrawal of the liquidation application would be the existence of a concrete and implementable transaction capable of achieving the objectives of business rescue,” they said in a statement.
“The postponement will allow parties additional time to progress engagements in this regard… Since the institution of the liquidation application on 12 February 2026, Tongaat has continued to operate under extremely challenging conditions.”
The implosion of Tongaat will put more than 200,000 jobs at risk, hit thousands of small growers and 1,100 large farms, and put the KwaZulu-Natal rural economy on the brink.
SA Canegrowers has warned that should Tongaat be liquidated, more than 18,000 growers will see their farms become economically unviable, leading to thousands of rural job losses.
“The liquidation of Tongaat Hulett affects the entire sugar industry and it is a direct threat to tens of thousands of rural jobs and livelihoods. For SA Canegrowers, safeguarding these communities must come first. The cost of preserving these operations is far lower than the long-term economic and social damage of allowing a viable milling business to collapse,” said Higgins Mdluli, chair of SA Canegrowers.
Chief among the challenges facing the industry are cheap sugar imports that are flooding the domestic market, with industry data suggesting imports up to December reached 163,000 tonnes, a 155% surge from the previous year.
Tau has moved to amend the constitution of the South African Sugar Association (Sasa), and the sugar agreement with the industry body is set to determine the quantity of sugar required for the local market, the quantity of carry-over stocks, and the quantity of sugar to be exported each year.
One of the major changes will see the South African Farmers Development Association take part in the decision-making echelons of Sasa, joining the SA Canegrowers at the high table.
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