Zambia Sugar PLC Output Hit After Workers Strike - Company

By Nicholas Bariyo

Special to DOW JONES NEWSWIRES

KAMPALA--Output at Zambia's largest sugar producer, Zambia Sugar PLC (ZSUG.ZM), has been paralyzed following a workers' strike over a wage dispute, the company announced Wednesday.

The company, a unit of South Africa-based Illovu Sugar Ltd. (ILV.JO), Africa's largest sugar producer, said around 3,000 workers went on strike Tuesday after weeks of bickering over wages, with a company spokesman warning that striking working could be dismissed.

"This is an illegal strike because the dispute is before court and there is no ruling yet," he said.

Tensions have been growing at the plant following the collapse of labor talks in May. The workers are demanding a 35% pay rise which management has rejected. Management referred the matter to the industrial court of Zambia in May and the court is yet to make a ruling.

Union representatives addressed the workers Wednesday and urged them to end the strike, but their appeals fell on deaf ears, according to company officials. Union representatives could not be reached for an immediate comment.

The plant exports 50% of its output to destinations including the E.U., with sugar and corn Zambia's main foreign revenue earners after copper and cobalt. Zambia's domestic sugar consumption is estimated at 150,000 tons and the country's sugar industry is self reliant.

Last week, workers placed notices around the plant advising unionized workers not to report for work this week.

The Zambian police said last week said that suspected disgruntled workers set ablaze a section of Zambia Sugar PLC plantation, damaging around 50 hectares of cane plantations.

In 2010, the company commissioned a plant and farmland expansion project at a cost of $174 million, which doubled mill capacity and increased plantation area by 9,000 hectares.

The company said in March that its 2012 output would rise to around 400,000 metric tons from 375,000 tons produced last year.

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