November 22, 2017 / 8:58 AM / a month ago

Iraq's Etihad Food yet to sign contract as buys more raw sugar from Alvean

BABIL, Iraq (Reuters) - Etihad Food Industries has bought six cargoes, each of 42,000 tonnes, of raw Brazilian sugar from Geneva-based Alvean as it continues to negotiate for a new long-term contract, a senior executive at the Iraqi company said.

“The deals are enough to last us until the end of March,” Etihad’s commercial director, Hayder Alnomani, told Reuters in an interview on Tuesday at its Babil-based refinery.

Etihad, whose refinery has dominated the Iraqi market since it came onstream in 2015, is in talks with around seven international trade houses for long-term raw sugar importing contracts after a deal with Alvean runs out this month.

Three of the cargoes have already been shipped and three are expected to arrive at Basra’s Umm Qasr port by January.

“We are taking a long time to negotiate a new contract because it is for a large quantity we are importing close to 1.4 million tonnes a year so that’s a big number,” Alnomani said.

Alnomani said a decision would be made within a month whether a long-term contract would be signed or whether the firm would secure its raw sugar supplies through regular tenders, held by invitation, every two to three months.

Etihad’s sugar refinery transformed Iraq from a white sugar importer to a raw sugar buyer. The refinery imported a total of 1.390 million tonnes of raw sugar from Alvean in 2017, all of Brazilian origin except 30,000 tonnes of Indian origin.

Its refining capacity has risen from 3,200 tonnes to 3,600 tonnes a day in 2017.

A worker unloads raw sugar at a sugar refinery in the city of Hilla, Iraq November 21, 2017. REUTERS/Khalid al-Mousily

Of its total production, 900,000 tonnes were sold inside Iraq while 121,000 tonnes were exported to neighboring countries.

Around 50 percent of Etihad’s sugar sales inside Iraq went to the trade ministry for the country’s food rationing program. That represents a drop from 60 percent the previous year, as budget constraints on the back of lower oil revenues limited government contracts.

The trade ministry is charged with distributing vital commodities such as wheat, rice, sugar and vegetable oils within Iraq, a major OPEC producer whose economy has been hit by war and lower crude oil prices.

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VEGETABLE OILS

Etihad, which pushed Dubai-based Al Khaleej sugar refinery out of Iraq’s white sugar market and is on track to start its expansion plans for doubling production in 2018, has also expanded into vegetable oils.

It started producing sunflower oil in March and has the capacity to produce 2,000 tonnes a day.

It has already sold 110,000 tonnes to the trade ministry, with the rest to the private market.

“We are planning by July or August to also start introducing new products like corn, canola and palm oils,” Alnomani said.

Etihad is buying crude sunflower oil through a regular tender process every two to three months by invitation to large trading firms. So far it has bought from suppliers such as Cargill, Aston, Wilmar, Glencore and Olam.

Reporting by Maha El Dahan; editing by Rania El Gamal/Louise Heavens/Alexander Smith

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