Papuan Sugar

Big Scheme Afoot Half Million for Enterprise Near Buna

THE prospectus has been issued of the Sangara Sugar Estates Ltd., a company with a nominal capital of £1,000,000. This company, which is registered in Papua, is to acquire 19,973 acres of sugar land in that Territory from the vendor company, and will plant sugar cane there on an extensive scale.

The projected scheme represents one of the biggest efforts yet made to develop the Territory. So far, the only two primary industries exploited to any extent have been copra and rubber. However, it is known that Papua possesses lands ideal for sugar growing-—it is the home of the “Badila” variety, the richest cane known in the world—and the new company is convinced that its market is assured.

The property acquired is in the Northern Division of Papua. The eastern boundary of the land is approximately 12 miles from Buna Bay, on the north coast. The land is well-drained and watered by five large fresh-water creeks of the Giriwu River. These have never been known to run dry.

The essential features of title are that it consists of four leases, totalling 19,973 acres, for 99 years, and the rental of the area (for the first 20 years) is only £275 per annum, or 3d. per acre, per annum. The four leases form one compact block, which will minimise cost of transport of cane, and provide for adequate ex pansion of the mill on economical lines.

Already 25 acres have been cleared and planted with “Badila” cane, reintroduced from Queensland. There is now sufficient cane to plant a further 400 acres, which in turn will provide ample cane for the optimum planting in the following year.

From actual investigations, it has been proved that the crops will mature in 11 to 15 months, and from the evidence of ratoonage in the native tillages, it appears that cane in Papua will ratoon profitably for a much longer period than is the case in Hawaii or North Queensland.

The company, in its prospectus, estimates that 240,000 tons of cane will be produced for the crushing season in July, 1934.

Papuan Administration's

Approval

The Papuan administration has shown itself to be distinctly sympathetic towards this new venture. The Lieut.-Governor, Sir Hubert Murray, writing on behalf of the Papuan Government, to Mr. Tom Nevitt, the general manager, in May of this year, washed the company every success.

He said that he had been informed that the conditions of the particular part in which the company had selected its plantations was exception ally favourable for sugar growing and, as labour should be readily available, the venture should have every chance of success.

It is interesting to recollect that in the Governor’s last annual report he said: “The sugar planters of Papua will certainly deserve success, and I see no reason why they should not achieve it.”

Strong Board Appointed

The company appears to have organised its enterprise on sound lines.

Its provisional directors are all men of standing. They include W. F.

Seymour-Howe, general manager of Mulgrave Central Mill Co., Queensland, and President for 1929-30 of the Queensland Society of Sugar Cane Technologists ; Sir Benjamin Morgan, engineer, of London ; Hon. Arthur Bunting, a well known merchant in Papua ; and Hon. G. W. Guttridge, general manager of the British New Guinea Development Co. Ltd., Port Moresby, Papua. Messrs. Bunting and Guttridge are members of the Papuan Legislative Council.

The company has contracted with Mr. T. Nevitt to act as general manager for a term of 5 years. Mr. Nevitt has been in the Territory for more than 20 years in charge of large plantations, and is considered to be one of the most reliable and experienced men in the plantation industry in Papua.

Marketing Of Sugar

Papuan sugar cannot enter Australia. The chief markets for the product will be Great Britain and Canada, and, as Papua is a British possession, the cane will have the advantage of a British Empire preference, which at present is £4/5/per ton.

It is pointed out by the company that while there is at present an overproduction of sugar in the world, it must be remembered that there is actually no overproduction within the Empire. In 1928, Britain imported 215,323 tons of refined sugar from foreign sources, and 86,412 tons from British sources-; whilst she imported 1,710,174 tons of raw sugar from foreign countries against 562,734 tons from her Dominions, The world’s production of sugar in 1928 was

28,218,000 tons, of which the British Empire produced only 4,675,000 tons.

Even if the preference, through political changes, is not continued, it is stated that, owing to the low cost of production, the Papuan sugar industry could successfully compete with foreign producers in supplying the United Kingdom and Canada, and show handsome profits by doing so.

Estimated revenue of the company is based on an annual output of 27,000 tons of sugar, at £9/10/- per ton, c.i.f.

London. This price is £3 below the world’s average selling price.

Another point, which is important to investors, is that the company is not subject to Federal, State, or Papuan taxation of any kind. Under the present Federal Income Tax Acts income derived in Papua is exempt from taxation.

In last issue, The Pacific Islands Monthly, after reviewing some company flotations based on Pacific Islands enterprises, urged investors to be very careful of this class of speculation. But the personnel of the Sangara Company is an indication of its being a genuine industrial enterprise.

It is proposed to issue 50,000 fully paid up £1 shares to the vendor, which is Sangara Sugar Estates Ltd.

The new company takes the same name—a rather unusual proceeding.

Evidently the shareholders in the present company (who are not disclosed) will distribute the 50,000 shares in the new company among themselves, pro rata ; and the present company's share list will be wiped out. Altogether 450,000 shares in the new company will be offered to the public.

The consideration for which the vendors will receive 50,000 £1 shares comprises 19,973 acres of leasehold, title for 99 years, the rental of which is £275 per annum The land has been surveyed, a road is being cleared and 25 acres have been planted with Badila cane. The vendors say that they have spent £7,000 on developmental work.

It is proposed to spend £337,000 on the erection of a mill, tramlines, rolling stock and wharf ; and another £113,000 in planting sugar and launching the enterprise.

Generally, the project is attractive, except that further particulars should have been given about the vendors’ consideration, which is the woodpile in which one naturally looks for the nigger. On the data given, £50,000— even if given in scrip—seems a lot to pay for the lease, the survey and 25 acres of plantation, on which only £7,000 has been spent. Promoters of such an enterprise are entitled to a substantial reward, but the present figures suggest a profit to the promoters of 500 per cent., which seems just a little excessive.

As against that, it may be noted that the vendors receive no cash consideration, and they may not sell any of their shares for five years. ... ===