Olam International Limited of Singapore has announced today that it has acquired 100% equity interest in Northern Coffee Corporation Ltd, the largest coffee estate in Zambia, for approximately US$6.15 million through a bidding process organised by the Zambia Development Authority.
A further US$40 million will be committed as capital expenditure and pre-operative expenditure to fully develop 2,000 hectares of Arabica coffee plantation over the next five years.
The estate is expected to yield approximately 4,500 metric tonnes of Arabica coffee beans by 2021 at steady-state.
The first 300 hectares are expected to be planted in 2013.
Northern Coffee Corporation was formed in March 2011 to take over the assets of Kasama Coffee Company, which had been in receivership since 2008.
ZDA and the indebted banks had been shareholders of Northern Coffee Corporation until this acquisition.
Northern Coffee Corporation’s assets consist of five estates on 5,866 hectares of land in the Northern Province
Approximately 1,580 hectares on three of these estates were previously cultivated for coffee production with dams, canals and reservoirs for irrigation.
The assets also include dry and wet processing facilities, warehouses, drip irrigation, employee housing and recreational centre, as well as a research centre.
Olam plans to develop a larger area in addition to the 1,580 hectares which were previously cultivated to bring a total of 2,000 hectares into coffee production.
This will translate into an output of approximately 4,500 metric tonnes of Arabica coffee per annum at full yield.
Olam’s Managing Director and Global Head of Coffee, Vivek Verma said: “Our successful bid to acquire Northern Coffee Corporation marks another milestone in executing our upstream strategy for Coffee.”
“Our selected investments in upstream as well as in processing (soluble coffee) coupled with our strong and growing supply chain business give us a uniquely balanced portfolio. With this portfolio and configuration of assets integrated selectively across the value chain, we are well-positioned for continued sustainable growth with consistent earnings in all price scenarios.”
We must close down ZDA because it is focused on impoverishing Zambia. We must employ Zambian expertise to run our assets such as this coffee farm. If NRDC cannot produce Zambians with enough knowledge and expertise, then we must sponsor Zambians to institutions abroad to go master management and running of coffee plantations.
Mr. Mulenga we don’t have capital and that’s the problem, to keep people working there must be investment unfortunately Foreign Direct Investment is the only option we have right now.
1.1: not only capital; acccess to markets is a big issue in the world. Zimbabwe used to be a strong economy because all its agricultural products found themselves on the Commonwealth market curtesy of the UK; and they were thinking everyone was rosy. But when they kicked 1 white farmer, markets shifted, perceptions changed and today we are singing the same story. We africans do not know how to use our resources to make a living out of them. Well done; let them come and grow more coffee.
Excellent deal. Signed, sealed and delivered!!!
This sounds like a very good deal to me as it takes into account the welfare of the community there and the amount of investment in a rural area is massive and good for the province and the country at large. Most
of the deals done by the late MMD were never near there e.g. the zambia railways , Kawamba tea co…..etc sagas.
Ba Mule, agribusiness is not just about managing growing coffee. That is not what is the issue. The biggest issue is the market. OLAM is an integrated business and provide a ready market. The only issue is that emphasis should also be placed on outgrower linkages, so that OLAM can also help outgrowers to learn how to grow coffee and market it. This is the missing apsect in this ZDA deal. Also, one wonders what this is alll about: this is more of a cheap LAND acquisition than anythin else.
Good point mwana. I agree with you.
If it was MMD the estate was going it be aquired free of charge
KK was right lets support Sata.Sanity has returned to Zambia
Oh no, the capital expenditures by government pn this coffee frims as of last year was US$16 M. The aland and other assets also have value. Why has government sold the estate at such a low price? Someone in the corridors of power is benefitting. I smell a big rat in here
Where is equity participation of Zambians?. If it ends up lke RSZ all ZDA directors must be held accountable. Tired of sweet talking theiving” infestors” conniving with Zambians in ZPA,now in the blantant rape the Zambian nation of its assets. A law should be made to make Zambian negotiators accontable for the “rubbish” deals
It was successfully privatised before under MMD; a collapse in coffee prices led to recievership, so this latest privitisation is nothing new. Anyway this is good news for Northern province, lets hope the latest buyers can do better
I honestly feel this is a company Zambians should have purchased. I am sure we have enough wealthy and capable business men and women.
why didn’t ZDA float this company’s shares so that Zambians can own it and recruit expatriate managers to run it if we are that daft to run it? I am ashamed to be educated, Zambian, but overlooked on basic ABC on developing Zambia. Just because the people at ZDA are brainwashed does not mean that all Zambians a failures. Some of us are abroad because of poor decisions such as this one by ZDA.
How can you float a company that is not currently not being run efficiently and profitable? Who would pay those expatriate workers you are referring to?
GBM was masterminding this deal. We at ZDA saw what was happening, this is yet another ZAMTEL saga where they announce huge figures lets see what the composition of these figures are. What are they buying and what are they paying for? We are now much more cleverer than we were before Sata.
I’ve just been on Olam International Limited’s website it has a very good track record in direct sourcing and processing presence in most major producing countries catering to 11,600 customers across the world.It has a global workforce of 17,000+ has built a leadership position in many of their businesses – including cocoa, coffee, cashew, sesame, rice, cotton and wood products.
I hope they invest in cashew nuts and rice as well as nuts and rice are rotting in Kalabo Western Province. Its time GRZ opened up that part of the country.
Theoretician
There you go again!! ZRL was leased out via a concession agreement and Northern Coffee was purchased outright via a bidding process.. I’m sure Zambian firms participated in the bidding and none came close to what the Singaporean company was offering…$40m investment! This is a modern company which follows progressive management principles and they have a ready market as they have a track record.
Shame on you ZAMBIANS, giving away coffee plantation without any local participation. All you ask for are cheap jobs without meaningful participation in mainstream economy of the country. My heart bleeds. I am a Zambian working for the South African government and contributed greatly to the drafting of the mining charter, which in short requires that any foreign company or investor must have a local black prtner(s) before being issued with a mining rights and since the promulgation of the charter in 2004, we have created black mining gurus with millions of dollars, while our highly qualified Zambian mining engineers are languishing in dire poverty instead of being at the forefront of minerals development. It is really sad when people like HH are castigated for making it.
How black millionaires have you created. Any one with knowledge of how the black empowerment in SA will tell you it have just benefited a few with political connections. That is why the miners were rioting and ended being shot. Do not boast in the hope that people are in the dark
@ 13Jay Jay whether it is a concession or outright purchase, it comes to the smae thing (liberalisation/privatsation to foreigners). NO ZAMBIAN participation. Only cheap low paying casual jobs. I just gave rRSZ as an example & I can give more examples Zamhort was privatised in such a deal as the Northern Coffee. And before long new state of the art canning plant and equipment was stripped and sent to SA. tHEcompany clsed and so did the casual jobs,Kapiri Glass was sold to a firm which just set up similar plant in TZ and wanted kill off competition. The first thing the did was to wreck the furnace beyond repair and thenwalked away. What more practical lessons do you want? Slow down on clicking the keyboard abroad and come to Zambia for a mind sobering visit!
PM
Its very ironic coming from you who is helping the RSA government with their mining charter when your country is also revising its mining policy that aims to empower its locals…there you are boasting of creating wealthy miners in RSA and scoffing at the Zambian miners.
Whaaaa! from the value of $16M to $6.15M, eeeeeee ee ee ee eh hee. Like someone says: Ndelolesha fye!!!!
Whaaaa! from the value of $16M to $6.15M, eeeeeee ee ee ee eh hee. And this is 100% acquisition. Like someone says: Ndelolesha fyee!!!!
I have seen a very big difference in how this govt is try to run this country from how MMD embarked on. MMD govt was encouraging partnership with zambian companies. But if you can give evetything to a foreigner, then what is there for a Zambian, how are we going to learn from the outsiders? I conquer with #11 Mimba.
Why lyonse kulayilishanya? Ifikala chimbwi, tefikale nema iyikaata! If Olam can grow the estate, employee Zambians, pay the duties and taxes on their export, support local empowerment and skills transfer I m happy! If we have no money to finance and expand local projects, the best you am do is to ie someone with money o o it for you!
What surprises is that, this is what the MMD was doing in less than seven years it was able to privatize most of the companies that were collapsing, but they condemned. PF is trying to do it the MMD way, it is okay for them. I do not understand who should do what or who should not do that. We people of Zambia do not appreciate. Mwee.
@Jya jay. Believe it or not, I have tried to contribute to to the development of an equitable mining policy for Zambia. I had a discussion with Mr. Kaunda Lembalemba, the then Minister of Mines in Australia. I had similar discussion with officials of the then Zambia Investment investment centre. I even had a discussion with Rupia Banda and his economic adviser when he was president. I have written numerous papers for Zambia on mining development. Yes I am working for South African Mineral Resources department, but please dont accuse of having abandoned my motherland. I headed the African Mining partnership from 2003 to 2010 and all I thought about was Zambia. They are a lot out there who want to help our country, but we are not appreciated. It seems like foreign is lekker.
Yes it is acquisition of 100% equity interest and not what GBM told us the other day that government has found an equity partner.
@ PM How many black millionaires have you created. Any one with knowledge of how the black empowerment in SA has worked will tell you it have just benefited a few with political connections. That is why the miners were rioting and ended being shot. Do not boast in the hope that people are in the dark