Roxas Holdings selling sugar mill in Batangas

MANILA, Philippines — Listed sugar and ethanol producer Roxas Holdings Inc. (RHI) has set the sale of its closed-down sugar mill asset in Batangas.

During the company’s virtual stockholders’ meeting, RHI president and CEO Celso Dimarucut said the assets of Central Azucarera Don Pedro Inc. (CADPI) in Nasugbu, Batangas is now for sale.

“CADPI (is) now classified (as an) asset for sale. Discussions are currently underway with potential buyer for the sale of this equipment. Hopefully we’ll be able to announce soon the outcome of this discussion,” Dimarucut said.

This is the second time RHI is selling its Batangas sugar mill, after a deal with Universal Robina Corp. (URC) did not push through in 2019 after the Philippine Competition Commission (PCC) thumbed down the transaction as it will result in a monopoly.

But in December last year, the RHI management decided to permanently close CADPI’s milling operations starting crop year 2022-2023 and to terminate its employees associated with the raw sugar operations.

Based on its latest disclosed information statement, RHI said the assets held for sale represent CADPI’s assets from its milling operations.

“Included in assets held for sale are CADPI’s machinery and equipment amounting to P897.3 million,” it said.

Dimarucut earlier cited the “inherent challenges in the industry with the significant decrease in cane supply in Batangas and increased fuel costs over the years.”

The move to close down the milling operations is part of de-risking the business “as it completed its pivot to sugar refinery as a standalone business model in Batangas,” he said.

The Sugar Regulatory Administration (SRA) earlier said sugarcane planters raised their concern over the closure of the mill mid-milling season.

“We also considered the possible impact of the closure of the Central Azucarera Don Pedro. This was a sudden closure, and we were not prepared for this,” SRA board member-planters’ representative Pablo Luis Azcona had said.

The SRA had urged CADPI to temporarily run the milling plant and assist in facilitating the milling of canes of its sugarcane planters, as the two other millers in the province have expressed willingness to process the displaced sugarcane.

With the closure, RHI now will focus on its sugar refining operations.

This as CADPI embarked on a strategy to maximize refinery production through expanding its fuel sources, thus de-coupling from its milling operations and the limited availability of mill-generated bagasse used as fuel.

RHI chairman Pedro Roxas said the stand-alone refinery removed its dependency on the mill, particularly on the mill-generated fuel bagasse and steam, to operate for 10 months — significantly longer than other sugar refineries in the country.

CADPI’s refinery can run on coal and other different types of fuel, Dimarucut said.

“CADPI was able to bring down overall fuel costs by blending with a cheaper type of fuel that would allow tolling margins. Tolling margins was also set at a level that will cover the high cost of fuel,” he said.

“In addition, we continue to look for alternative sources of fuel coupled with our continuous efforts to improve operations and efficiencies of the refinery,” Dimarucut said.

CADPI provides the refined sugar requirements of traders and industrial customers such as multinational food and beverage and pharmaceutical companies in Luzon.