by Fred Pearce
Mimran’s monopoly is being challenged by the Nigerian sugar and soft-drink baron Aliko Dangote. Dangote, an influential political sponsor back home, recently toppled the Saudi-Ethiopian land grabber in Gambella, Sheikh Mohammed Hussein Ali Al Amoudi, as the world’s richest man of African descent. In 2011, Dangote was reported to have obtained 100,000 acres from the Senegal government to pursue his sugar dreams. But more sugar estates on the banks of the River Senegal will inevitably deprive herders of their grazing grounds and farmers of irrigation water, especially given the similar grabs for land being made by Arab investors in rice production (see chapter 3).
The world has a sweet tooth. But demand for sugar is being accentuated by its emergence as the feedstock of choice for making ethanol to burn in cars. Brazil, which pioneered the sugar-to-ethanol business back in the 1970s, continues to expand its huge plantations, often with foreign capital. Americans are piling in, led by investors George Soros, Goldman Sachs, Merrill Lynch, and Sun Microsystems. So are foreign energy companies like BP and Shell. But Brazilian sugar producers are eyeing Africa, where land is cheaper than at home. The country’s third-biggest producer, Açúcar Guarani, recently bought Mozambique’s Sena Holdings, which has 35,000 acres of sugar plantations.
Joining them, Singapore’s ubiquitous commodities giant Olam said in 2010 it was looking for somewhere to plant 25,000 acres of sugar-cane in Africa. And Swiss-based Addax Bioenergy has secured 25,000 acres of savannah grassland in central Sierra Leone to grow the stuff. “Some isolated settlements may be asked to move,” it says. But there won’t be many jobs for cane-cutters, because the company has opted for mechanical harvesting. The water will come from damming the nearby Rokel River.
The world’s largest sugar farm remains Sudan’s flagship Kenana sugar plantation. It covers 210,000 acres of desert on the banks of the White Nile, 150 miles south of Khartoum, and is easily spotted by Europeans on flights to and from East Africa. It has its own desert city of sixty thousand people to tend it.
Kenana was the brainchild of Tiny Rowland back in the 1970s. But its dominant shareholders today are the Kuwait Investment Authority and the government of Saudi Arabia. The farm meets all Sudan’s sugar needs and exports across the Middle East and North Africa, India, and Europe. Its irrigated desert fields require a staggering 2.4 million acre-feet of water a year—roughly 4 percent of the entire annual flow of the Nile, the world’s longest river. It is probably the biggest single agricultural water user in the world. Its thirst may soon increase further. Beltone, an Egyptian private equity fund that won big in the real estate boom during the Mubarak era, has decided to invest a billion dollars in Kenana to help Sudan double its sugar output by 2014.
The sheer scale of sugar production often makes it a social and environmental menace. In the eighteenth century, its cultivation in the Caribbean was the economic driver of the slave trade. It helped enrich British slave ports like Bristol and Liverpool, on the backs of Africans forcibly shipped across the Atlantic to cut cane in Jamaica and Barbados. Rain forests, wetlands, and rich pastures have all been cleared for the crop, and rivers emptied. In seven countries, its cultivation once covered more than half the entire land area. Numbers are down now, but it still covers around 40 percent of Mauritius.
And it still warps societies. Sugar accounts for almost two-thirds of the agricultural output of Swaziland, a small, landlocked kingdom in southern Africa. The country produces more than 4 tons of cane a year for every inhabitant. Sugar generates a fifth of Swaziland’s meager GDP, and directly or indirectly employs most of the adult population. But the industry locks up land and labor so tightly that few other enterprises get a look in.
Illovo is there, with some 20,000 acres of cane fields. But the dominant producer, and the nation’s main employer, remains the Royal Swaziland Sugar Corporation, a company that is the personal property of UK-educated King Mswati III—Africa’s last absolute monarch. The king’s corporation is also, in effect, the country’s government, buying farm produce, providing the only clinics and schools, employing its own police force, and building roads and power lines. Most of its sugar output goes either to South Africa or to the Tate & Lyle factory on the Thames estuary, the world’s largest sugar refinery, now owned by American Sugar.
The country is an economic slave to sugar, maintained at the whim of an absolute monarch—and of Illovo’s owners, the secretive Weston family in Canada.
Chapter 22. Mozambique: The Biofuels Bubble
Richard Morgan was a happy man in mid-2011. After four years of planning, his company shipped its first batch of oil made from the seeds of a toxic African weed called jatropha, grown on a former tobacco plantation in Mozambique. Sun Biofuels’s first client was Lufthansa, the German airline. Morgan had invested no less than $9 million and employed over a thousand people cultivating 7,500 acres of land, to get those 30 tons on the boat at Beira. It looked like a breakthrough in turning Africa into a hub for saving the planet from climate change through the production of green biofuels.
Lufthansa had just won permission from airline regulators to fly planes powered by kerosene containing jatropha juice. For now it was one engine on a regular flight from Frankfurt to Hamburg, but the company had seven hundred aircraft. “Lufthansa alone is seeking 400 million litres of biofuels every year,” Morgan’s local boss, Luis Gouveia, told excited media in Mozambique. Well, that was the story, anyhow. But three months later, Sun Biofuels was bust and in receivership. The cash had run out. Investors took flight faster than a Lufthansa jet, and Richard Morgan was nowhere to be found.
Sun Biofuels had looked like one of the brightest stars in the biofuels firmament. It was backed by some big names in the City of London, including boutique investor Simon Shaw and his EEA Fund Management, a carbon-trading outfit. Morgan told me in 2011 that by 2015 he would be cultivating 25,000 acres of jatropha, producing 20,000 tons of oil a year. There was, he admitted, a lot of technical stuff to get right first. When I found Morgan, in his modest fourth-floor office above an estate agent’s in a building in Kensington, he was on the phone to Mozambique, deep in conversation about the relative merits of heavy and light pruning of jatropha bushes. For, while there may have been a wave of enthusiasm among financiers for jatropha, the would-be wonder-fuel was still an experimental crop. The best ways to grow and harvest it remained work in progress, he told me.
Morgan was also dealing with some flak from NGOs keen, he believed, to shut down his operation. One charge, of course, was land grabbing. He felt that was unfair. After all, his Mozambique plantation was largely made up from eleven old tobacco farms that dot the area west of the town of Chimoio on the road to Zimbabwe. The farms had been abandoned by Alliance One Tobacco, a merchant based in North Carolina. A thousand-strong workforce had been laid off for two years, till Morgan began planting. “When we returned, there were seven hundred people waiting at the gate,” he remembered. “They had gone back to subsistence farming in the meantime. To the bush, essentially.”
The Mozambique operation was Sun Biofuels’s showcase. Britain’s international development minister, Stephen O’Brien, toured it in early 2011. The local governor was so pleased at how things were going that he offered Morgan another old tobacco farm. But there were problems elsewhere.
At the start, in 2005, the company’s first land grab was in Ethiopia. The government there gave it communal pasture in Benishangul Gumuz, north of Gambella near the remote border with Sudan. The company established jatropha nurseries and planted some 12,000 acres. With an option on another 200,000 acres, and talk of taking more land in Tigray and elsewhere, it was shaping up to be a big operation. Then the company thought better of it and began to pull back. Remoteness seems to have been one factor, but clearly the crop wasn’t doing well, either. Sun Biofuels effectively pulled out of Ethiopia.
The company next set up in Kisarawe, central Tanzania, on 20,000 acres of what it called “severely degraded coasta
l forest . . . devastated by charcoal burners and firewood collectors.” From the start, it was in trouble with the locals. Morgan dismissed the charcoal burners. They were squatters and would be moved out, he told me. But there were several villages in the plantation area, too. Nobody farmed the plantation land, but they did use it for grazing and foraging for fruit, firewood, and other materials. “We spent two years talking to the villagers, eleven thousand people altogether. We spoke to everyone we could find. The villagers decided what land we should have, and we paid compensation for what we took.” So he played it by the book. But, he added, “yes, sometimes small people do get trampled on.”
I appreciated his candor. Some didn’t. Friends of the Earth, in a report in 2010, simply said he had “cheated villagers of their land.” That made him angry. “They are sitting at their desks in London, having never visited the farm, and criticizing us for land grabbing. Why aren’t they pleased that we are protecting the forests from the charcoal burners?” Oxfam waded in, too. At least they visited the site, Morgan said. “But they were pathetic. They went to Mtamba, one of five villages that didn’t contribute any land—and found they didn’t get any compensation. The people who did lose land have all been compensated, and the money was paid to the individuals concerned. The people at Mtamba were actually cross because we hadn’t taken their land, so they missed out on compensation.”
These early forays happened before Morgan arrived in 2007. The legacy clearly embarrassed him. He admitted to me that “the founding shareholders weren’t pleasant people. They wanted a quick in and out.” They imagined there were quick profits to be made. “But a lot of the early claims have been debunked now.” He saw success just around the corner. “We can see much more clearly what will work and what will not. I worked for New Britain Palm Oil in Papua New Guinea. They are like a military camp. Really efficient. We’d like to be like that.” He told me he thought his investors were in it for the long haul, with no profits likely before 2015. “We are well funded, with [Shaw] willing to keep spending. And we have been prudent.”
But months later, it had all collapsed. The company talked of a drought in Tanzania upsetting production. But if Morgan had been right about his investors, it would not have mattered. In reality, they had gotten cold feet as quickly as their predecessors had. The leases were sold on—in the case of Mozambique to British hedge fund managers at Highbury Finance. But for the time being at least, the farms were untended. This is one of the problems when the corporate and financial worlds move in on the peasant world. If things go wrong, they can move on and make their profits elsewhere. But they often leave behind broken promises and angry and disappointed locals with a mess to clean up.
Sun Biofuels has joined a growing list of companies that tried and failed to make it big from the world’s sudden enthusiasm for biofuels in the first decade of the twenty-first century. Some might have succeeded. Others always looked like buccaneering bad boys.
Energem was a Canadian company owned by a South African, Tony Teixeira. Previously known as DiamondWorks, it had a well-documented involvement with people who were trading “blood diamonds” from Angola and Sierra Leone. It had links to London mercenaries, and at one point employed Simon Mann, a former SAS officer who was later convicted in Equatorial Guinea for trying to organize a coup there. Allegations that Teixeira was aiding gun runners supplying South Africa–backed UNITA fighters in Angola led to his being dubbed a “merchant of death” by British foreign minister Peter Hain in 2000.
Under its new name, Energem embraced the new century by pitching into the biofuels boom, buying an ethanol plant at Kisumu in Kenya from the family of Raila Odinga, the current Kenya prime minister, and winning a listing on the London Alternative Investment Market in 2007. On the back of that, it won a 150,000-acre concession to grow jatropha on grazing land in the Mozambique province of Gaza. It planted some 5,000 acres. But in mid-2010, Energem suddenly stopped paying salaries at the farm, and in early 2011, the Daily Telegraph reported that it had gone bankrupt “without telling shareholders.” The bankruptcy had happened, the paper said, “after it could not recover $54 million owed by companies linked to its deputy executive chairman [and owner] Tony Teixeira.” This was not surprising. The debtor companies, it turned out, were mainly connected with Teixeira’s auto-racing enterprise A1 Grand Prix, which went into liquidation in 2009.
Energem was notorious in Africa for having bought an executive jet from another business controlled by Teixeira. The plane was needed, Energem said at the time, to ferry its management to “any location in Africa at short notice.” Quite so.
At its height, the biofuels boom was popular among a number of figures in the minerals world. Some 400 miles south of Sun Biofuels’s Mozambique plantation lies the detritus left behind by another band of minerals entrepreneurs who got into biofuels. Whether, in Morgan’s words, they were “pleasant” or not, they and their investors certainly seem to have wanted “a quick in and out.” Their failure left a bad taste in the mouths of thousands of Mozambicans.
A lot of English people who know nothing of finance, or even biofuels, have heard of one of the group. Phil Edmonds was a famous English cricketer, noted, according to one leading textbook on the sport, as being “a throwback to an earlier time . . . with his aristocratic manner.” Maybe that aristocratic manner helped him carve out a controversial career in financing mining deals that frightened off others. Maybe it also helped his company, Procana, secure 75,000 acres of Massingir district in Mozambique, close to the South African border.
Edmonds owned Procana with a Zimbabwean friend, Andrew Groves and a South African, Izac Molthausen. They promised to raise $500 million to clear the land and grow sugarcane for ethanol production and sale in South Africa. But the company quickly got into disputes. First, the local agencies running the Great Limpopo Transfrontier Park—Anton Rupert’s first “peace park”—claimed the Procana concession took half of the land earmarked for resettling people made homeless by the park. Then local farmers said the company destroyed some of their fields during early clearing, and unnecessarily cut them off from vital sources of water along the Elefant River. Tihovene village, one of six involved, said Procana had taken most of its fields and grazing land without their consent, while land they had offered was ignored.
The trio of biofuels musketeers seemed both high-handed and inept. But in any event, the money was never raised, few of the promised seven thousand jobs were ever created, only 2,000 acres were ever cleared, and they pulled out without even telling the Mozambique government, which canceled the lease when it found out.
There is no trace of Procana now. The three men went back to their mining deals. They have since acquired 60 percent of minerals exploration rights to 200 square miles of the Kpo mountains in Liberia and are pursuing coal-mine interests in Zimbabwe and Botswana. But they did not entirely give up on farming. Edmonds and Groves are now chairman and chief executive of a new company, Agriterra, which has a 50,000-acre beef ranch under development in Mozambique. They promise investors that by 2013, they will have ten thousand animals grazing new pastures at a small town named Dombe, which the government has recently cleared of both land mines and tsetse flies. It is, coincidentally, just down the road from the abandoned fields of Sun Biofuels.
Many such biofuels projects have collapsed across Africa. In Tanzania a Dutch jatropha plantation called Bioshape, which claimed 200,000 acres, went bankrupt. As did a scheme run by a Swedish clean energy company, Sekab. Others limp on. Take the fate of Flora EcoPower. In 2007, the Munich-based company joined up with two Israeli brothers, Alon and Ayal Hovev, to operate two big concessions they had won in Ethiopia and Madagascar. The idea was to grow castor beans, from which to extract oil to make biodiesel for Europe.
In Ethiopia, their fifty-year lease covered 140,000 acres of land an hour’s drive from Harar, a town east of Addis Ababa known for its mosques. Satellite images commissioned by the company suggested
the land was empty. But in fact there were pastoralists. And environmentalists said the forests they cleared were inhabited by elephants and black-maned lions, the Ethiopian national symbol. The plan went ahead, nonetheless. A processing plant was built. In 2008, the first castor beans were produced. Things looked good. The company reportedly planned another 180,000 acres and a large outgrower network. Prime minister Meles Zenawi paid a visit. But in April 2009, the Hovev brothers disappeared. Employees were left without five months’ wages, and banks with debts.
At almost exactly the same time, the same thing happened at the other joint project in the Mangrare valley in Madagascar. The company had 100,000 acres and had begun trial planting in 2008. According to local academic Barry Ferguson, “the Israelis bugged out in March 2009.” Ferguson claims that they first “commandeered all the company assets, including a couple of tractors, before they left.” Again, there were staff left unpaid. One of Ferguson’s students, an intern working there, was left stranded.
The shareholders of Flora EcoPower changed the company’s name to Acazis, paid up the outstanding bills, resumed business in Ethiopia (though not in Madagascar), and declined to answer my questions about what happened in the Hovev days. In Ethiopia at the end of 2010, the new CEO, Patrick Bigger, blamed his former Israeli managers for the debacle. “It was discovered that they were not managers, and not even farmers,” he told a local interviewer. When last heard of, the Hovevs were in Tanzania, as director and head agriculturalist at Tendaji Agro, a company that says it is trying to re-create in East Africa the Israeli kibbutz system of cooperative farming. Ferguson said that in late 2011 the Madagascan site was “completely dormant.”
