Climate change report

Illovo’s commitment to improve environmental management processes is underpinned by continuous improvement in the management of direct environmental impacts across its value chain. Our management of the environment is guided by the commitment to minimising, and ideally eliminating, negative impacts on climate change. Our reporting on the environment, guided by the GRI and the UN Global Compact communication requirements, is structured to reflect the inputs, outputs and modes of impact the organisation has on the environment. Materials, energy and water represent three standard types of inputs used by all of our operations. These inputs result in outputs of environmental significance, which are captured under the parameters of emissions, effluent and waste. Land and biodiversity are also related to the concepts of inputs to the extent that they can be viewed as a natural resource.

We have identified energy, emissions, water, waste and effluent, and biodiversity as the most material environmental indicators throughout the group’s operations. In line with our commitment, the environmental strategy responds to environmental statute and a guiding environmental management framework, including those developments brought by our participation in mandatory and voluntary disclosure programmes, such as the CDP Climate Change and Water Disclosures (www.cdproject.net).

The environmental strategy aims to further:

  • guide our operations to improve on their sustainability-linked environmental strategic objectives, eg climate change mitigations, water resource management, responsible operational and agriculture practices;
  • implement comprehensive environmental improvement plans which respond to both risk and maximising opportunities;
  • create wider environmental awareness and improve responsiveness to key environmental performance indicators;
  • undertake rigorous assurance and external audits to continue the focus on reducing legal liabilities and environmental impact; and
  • leverage improved environmental performance throughout the value chain.

In respect of the UN Global Compact, and with reference to the Rio Declaration on Environment and Development, Illovo’s precautionary approach is that when considering new business ventures and expansions, comprehensive due diligence and environmental impact assessments are undertaken to ensure that potential negative environmental impacts are identified and mitigated.

In a further example of our progress towards sustainable agricultural operations, the World Wildlife Fund, in partnership with the Noodsberg Cane Growers’ Association, and supported by our own Noodsberg sugar factory and refinery, was instrumental in the development of a Sustainable Sugar Cane Farm Management system for growers, termed SUSFARMS®. This concept is based on three fundamental environmental principles for sustainable sugar cane production – natural assets are conserved, critical ecosystem services are maintained and agricultural resources are used sustainably, all in conjunction with social and economic drivers. Performance relative to the principles is judged according to verifiers, making for a potentially creditable certification system for implementation at other sites. The South African Sugarcane Research Institute (SASRI) continues to enhance the SUSFARMS® model. Through our membership of the South African sugar industry, we contribute to the pursuit and practice of the SUSFARMS® ideology in this country. We aim to carry out a SUSFARMS® gap analysis across our operations outside South Africa during the course of the 2014/15 season with the goal to further enhance our credibility going forward.

Environmental management at our operations is implemented according to the NOSA Integrated Five-star Management System and ISO 14001. Illovo extends the control of environmental aspects and impacts by ensuring contractors accept comprehensive safety, health, environmental and quality specification requirements prior to providing services to Illovo, thereby controlling their environmental impacts into our business. We conduct legal and operational risk control audits on a regular basis as part of our operational risk management systems assurance programme. In 2013, our Zambian subsidiary received the Zambia Chamber of Commerce and Industry’s environmental award for Business Leader in Corporate Environmental Stewardship 2013, which recognises companies that show leadership in addressing environmental issues. It also received the 2013 Environmental Award for Overall Contribution to Sound Management Practices in Industry from the Zambia Environmental Management Agency (ZEMA) as well as the Best Environmental Awareness Award in 2013 at the Agricultural and Commercial Show of Zambia (ACSZ) in Lusaka, which recognises an exhibitor who showcases exhibitions that promote best environmental management practices.

Technology, research and development

Illovo’s future sustainability objectives are underpinned by technology, research and development. In order to optimise the return from our existing installed capacity, we have well established in-house resources which provide technical expertise in agricultural production and sugar and downstream product manufacture to all operations. A centralised core of expertise exists to ensure technical standards are optimised and maintained for both existing equipment and new agricultural and factory installations, and to keep abreast with technical innovations. This in-house function is also involved in investigating opportunities to expand our operations, and in the planning and implementation of approved projects.

Our collaboration with regard to the application of new technology and energy and process performance optimisation between our own technical service function and AB Sugar is ongoing. Benchmarking to improve productivity and reduce unit costs is a major area of attention at all operations, resources having been allocated to enhance operational performance and benchmarking across the group.

We continue to benefit from research and development undertaken by the South African Sugar Milling Research Institute and SASRI. These organisations are funded by the member sugar industries which are represented on the respective boards of the institutes.

During the year under review, we spent R13.4 million on research and development.

Energy

Energy efficiency continues to be increasingly important to Illovo, given the growing demand for and increasing cost of energy and the corresponding impact on the environment together with that of the risk of power outages from national grids. We are focused on reducing the environmental impact of our products, including efforts to drive new levels of energy-efficient performance. We proactively monitor and manage energy consumption throughout the group’s operations, and constantly look for ways to improve the energy efficiency of its production processes.

This includes employing better management systems, improving our own staff awareness and investing in new technologies. Sugar cane offers excellent opportunities and competitive advantages for the production of renewable energy sources compared to other agricultural crops. Our operations continue to explore increased use of renewable energy where possible, thereby reducing their dependency on fossil fuel. The Eston site in South Africa has reported zero use of coal during the 2013/14 season by improving energy efficiency in the production process. Across the group, 90% of all energy consumed within Illovo’s operations was sourced from renewable resources, replacing fossil fuel alternatives. Another energy initiative to reduce reliance on imported electricity is being undertaken at the Merebank site where we are investigating the viability of an anaerobic digestion plant which will provide an estimated 80% of the site’s gas requirements in the form of methane gas.

Our energy strategy is generally site-dependent and for sites where we burn supplementary fuel, ie fuel in addition to bagasse (and biomass), our energy reduction target is to rule out the use of supplementary fuel altogether. Reducing energy consumption beyond this target would result in excess bagasse residue stored on site and carry additional handling costs.

Total Energy Consumption by fuel category 
GWh  2014  2013 
Non-renewable energy used during the year  1 062  963 
Renewable energy used during the year  9 557  9 134 

energy consumption by primary energy source 
Energy Source  MWh 
Synthetic gas  160 570 
Diesel  85 707 
Petrol  2 799 
Coal  474 942 
Heavy fuel oil  2 682 
LPG  1 123 
Renewable – bagasse  8 920 141 
Renewable – biomass  112 379 
Renewable – wood  515 811 

Indirect energy is produced outside Illovo and consumed for Illovo’s intermediate energy needs. 

Indirect Energy consumption by primary energy source (MWh) 
Energy Source  MWh 
Imported electricity  334 592 

(%)  2014  2013  2012 
Bagasse  84  85  86 
Coal 
Electricity 
Imported steam 
Biomass and wood 
Other fuels  2*     

* Synthetic gas use replaced imported steam. 

The energy intensity achieved was 5.8 MWh of energy per ton of sugar produced, representing a decrease when compared to 6.5 MWh per ton of sugar achieved in 2012/13. For sites where we burn supplementary fuel, ie in addition to bagasse, our energy reduction plan is to reduce the supplementary fuel burnt to zero.

Investing in renewable energy

Various by-products of the sugar manufacturing process present the industry with the opportunity of generating the bulk of its energy requirements. A world-wide trend has seen sugar mills reaching a point where they have generated surplus energy to be exported, creating significant ecological and economic benefits.

Co-generation

Dry, fibrous bagasse, remaining after the extraction of juice from the crushed stalks of sugar cane, provides us with a substantial renewable energy opportunity for co-generation, replacing fossil fuel sources such as coal and electricity generated from coal, thereby reducing ghg emissions. In addition to bagasse, certain of our operations, Ubombo in Swaziland, Nchalo in Malawi and Noodsberg in South Africa, are able to supplement their co-generation capacity by utilising additional green cane biomass and wood/woodchips as boiler feedstock. During the year under review, these operations utilised approximately 160 000 tons of biomass and wood/woodchips as renewable fuel sources to produce over 387.1 GWh of heat and energy in their dual-fired boilers. We are continuing to assess opportunities to increase the co-generation capabilities of all our operations.

In addition to the environmental and cost benefits, co-generation provides a potential source of additional revenue through the export of energy into national grids. With its integrated co-generation facility, it is anticipated that our Ubombo mill in Swaziland will export 55 GWh to the national grid over a 48-week period by 2015. During the year under review, a total of 44.8 GWh, was exported to the grid, an increase from 36.9 GWh exported during the previous season. The sale of this renewable energy directly enables the Swaziland Electricity Company (SEC) to reduce its Scope 1 emissions and consequently its customers’ Scope 2 emissions. Based on the Swaziland grid emissions factor published by the UNEP Risø Centre (National GEF for Swaziland – 796 kg CO2per MWh), the sale of this electricity enabled SEC to avoid 36 218 tCO2 in 2013/14. Zambia Sugar exported a small amount of power on a test basis into the national grid, while Dwangwa in Malawi exports power to an external organisation.

Bioethanol

An additional renewable energy opportunity provided from the by-products of sugar processing is the fermentation of molasses to produce bioethanol. We continue to give consideration to entering the bioethanol market at certain operations, as we believe that there are significant potential commercial opportunities associated with renewable energy, which currently only represent a very small fraction of the total global energy use. Following a series of preliminary investigations, detailed technical feasibility studies in Zambia are currently underway. However, our move into the market will depend largely on the commercial viability and implementation of enabling blending regulations within the country of operation.

The production of bioethanol would provide us with the opportunity to further decrease our fossil fuel usage, increase use of renewable cleaner fuel and provide an additional revenue stream.

Non-renewable energy

The largest use of non-renewable energy across Illovo occurs within our South African operations at our four sugar mills and two ethanol distilleries. During the year under review, these manufacturing operations collectively consumed 55 542 tons of coal, representing 85% of Illovo’s total coal usage.

In an effort to reduce overall coal consumption and improve energy efficiencies within these business units, we have initiated a broad-scale Performance Optimisation Plan (POP) at an operational level. Together with the planned increased substitution of coal with renewable sources of energy, such as bagasse and woodchips, we anticipate that there will still be a substantial reduction going forward in the consumption of coal and purchase of electricity. By 2017, the South African operations aim to reduce their coal consumption by 25%, from the 2009 base line.

Continuing energy-saving projects undertaken at operations within Illovo during 2013/14 included the energy mass balance assessments of the Ubombo, Sezela and Noodsberg mills in order to maximise factory modifications and monitor energy reduction equipment performance.

Emissions

The group’s primary source of energy is from the use of bagasse which substantially decreases process ghg emissions at Illovo’s operations, in comparison to the use of fossil fuel sources. Certain of our operations have adopted “green cane harvesting” where practical, which decreases agricultural emissions caused by the burning of sugar cane prior to harvesting. During “green cane harvesting”, green biomass is stripped off the cane, either mechanically or by hand, as an alternative to the traditional practice of burning. This trash removed from the cane is either left infield to render back into the soil, potentially improving soil moisture retention, nutrient levels and carbon sequestration, or used as a renewable boiler fuel. Green cane harvesting operations are currently being undertaken in Malawi, Swaziland and South Africa.

Illovo will again respond to the CDP, demonstrating our commitment to transparency concerning our Scope 1, 2 and 3 GHG emission reduction initiatives at our operations and to supporting global climate change mitigation. Scope 1 are direct GHG emissions as a result of fuel combustion, process and fugitive emissions; Scope 2 are indirect GHG emissions from purchased electricity while Scope 3 are indirect GHG emissions from services such as third part transport of Illovo products.

In terms of our air emissions strategy, we aimed to reduce ghg emissions across the group by 10.7% on the 2010 emissions level, by 2020. As a result of Merebank’s switch from EB Steam to Sasol Gas which accounted for 134 027 tCO2e (Scope 2) in the previous year, we produced 30 612 tCO2e (Scope 1) in 2013/14. The net effect was a reduction of approximately 99 540 tCO2e. We have thus already exceeded our group target by decreasing ghg emissions by 14% compared to the 2010 baseline.

Based on the projected increase in sugar production, the effective ghg emissions reduction will be 34% from the 2010 base year, supported by these and other projects in our global climate change mitigation strategy:

  • Merebank is investigating the viability of an anaerobic digestion plant which will provide an estimated 80% of the site’s gas requirements in methane gas;
  • we are presently engaged in an energy optimisation project at Sezela to reduce its coal burn by an estimated 8 500 tons per annum and reduce its imported electricity by 19 GWh. This will reduce Scope 1 emissions by approximately 18 000 tCO2e and Scope 2 emissions by approximately 18 000 tCO2e;
  • energy reduction initiatives are ongoing at Noodsberg where a boiler upgrade aimed at reducing the factory’s need for supplementary fuel has been commissioned; and
  • we are investigating energy opportunities at Ubombo which will have the impact of reducing the factory’s reliance on supplementary fuel, particularly coal and woodchips.

As per the graph below, in 2013/14, the group produced 550 001 tCO2e (Scope 1 and 2) ghg emissions at an intensity ratio of 0.3005 tCO2e/ton of sugar produced. This represents a reduction in the intensity ratio from the 0.3153 tCO2e/ton of sugar produced achieved in the previous year. The increase in Scope 1 emissions resulted from the reporting of new streams of ghg emissions incorporating those from wastewater treatment and direct emissions from managed soils within the group’s agricultural operations.

As part of our efforts to monitor environmental impact from indirect sources such as agriculture outgrowers, transport of sugar cane and finished product, we have begun to monitor their ghg emissions contribution (Scope 3). Approximately 57 059 tCO2e (Scope 3) ghg emissions were released from Illovo-controlled downstream transport and distribution; whilst 168 863 tCO2e (Scope 3) emissions were released from outgrower crop and land management-based activities.

Air quality is monitored for both point source emissions (stack emissions) and ambient air quality (fugitive emission) in line with respective country legislation. The key improvement priorities in relation to point source emission are:

  • improvement in the boiler technology in order to increase the efficiency of the boilers and to reduce carbon monoxide, sulphur dioxide and particulate matter; and
  • improvement in the current incineration technology used for the incineration of medical waste from on-site clinics in order to sufficiently and safely incinerate medical waste, and to reduce the risk of exposure to dioxins.
  • improvement plans based on the adoption of preventative and mitigation measures, including appropriate maintenance procedures, to reduce fugitive bagasse and stack emission, ie particulate matter.

Water

Illovo recognises that water is a global resource that requires local management. The risk management strategy identifies that risk factors concerning water are exacerbated by issues of scarcity and accessibility across community and national boundaries, and often involve interdependent factors that vary from country to country and region to region.

Ensuring access to a reliable supply of water is a critical strategic priority for Illovo to meet both its business needs and that of surrounding communities.

Illovo is currently implementing a water footprint strategy so as to optimise the use of water and hence energy per unit of production. Ultimately, through developing a better understanding of our water-related risks, our objective is to be able to provide strategic direction to our operations and an elevated understanding of localised water resource risk factors.

Examples of actions undertaken by the company to improve the management of water resources and to mitigate the impact from our activities on natural water ways include the following:

  • the phased approach to reduce the burden on municipal water supply and thereby subsequently producing less effluent for discharge at the Merebank site. Water will be recovered from the process stream to be used in the alcohol fermentation process;
  • the sale of vinasse (a by-product of the molasses distillery process) directly to farmers, is progressing well, which will aid in the reduction of overall effluent discharge volumes;
  • an amount of 623.5 million litres of water was recycled and re-used within our operations across the group;
  • in Malawi, both Dwangwa and Nchalo spray our roads with vinasse so as to suppress dust and also use the vinasse solids as a liquid fertiliser in the fields. Due to the high COD-load of vinasse, care is taken to avoid spraying on roads that directly impact on run-off’s to rivers; and
  • in South Africa, our effluent treatment plants and ash dams have overflows which release cleaned water into the neighbouring natural courses.

We undertake water abstraction operations in compliance with existing water-use licences which are issued by the relevant authorities within the countries of operation. Water discharge volumes and methods vary by site, but are usually monitored and regulated to ensure compliance with relevant national statutes. We continually evaluate and implement new processes to improve efficiencies in an effort to reduce overall water consumption and maximise the recycling of water in our secondary processes.

As a result of the detailed water footprint study, coupled with improvements in water monitoring and reporting, the group’s water usage in 2013/14 reflects an increase compared to the previous season. Despite this, there has, however, been improvement in water reuse and water recycling. It is anticipated that the water management strategy completed during this year will improve our operational responsiveness and assist greater water conservation goals.

Total water abstraction across all operations 
  Volume (million litres)  Percentage 
Source  2014  2013  2012  2014  2013  2012 
Surface (rivers)  942 695  866 369  916 557  99.78  99.67  99.79 
Ground (borehole)  980  1 330  735  0.09  0.15  0.08 
Municipal  1 248  1 582  1 216  0.13  0.18  0.13 
Total  944 923  869 281  918 508  100.00  100.00  100.00 

Waste

Illovo’s overall approach is the “duty of care” principle from “cradle to grave” by way of operational guidelines which are aligned to legal requirements and focus on facilitating comprehensive waste inventories in order to reflect classification and rating of waste generated by operations. Colour coded bins, labelling and signage is used widely to create awareness and facilitate compliance. Waste management in terms of better on-site segregation with particular attention to avoid the mixing of hazardous and non-hazardous waste, recycling, and waste disposal tracking, is improving across all sites. The on-site waste management programmes ensure that waste which is reusable, recyclable and waste to be disposed of, is stored in the designated waste bins and/or storage facilities. All the waste is quantified using weighbridge or safe disposal certificates to reconcile quantities generated.

The recycled input material applicable to our operations is limited to the toner cartridges and the copper chrome catalyst sent to the manufacturer BASF in Germany, and returned to our downstream plant for reuse. A total 28 tons of copper chromate catalyst was recycled. In Swaziland waste such as fluorescent tubes, leaded filter paper from the laboratory, asbestos containing waste, expired chemicals (non-medicine) and used transformer oil is transported via an accredited waste management company to South Africa for final disposal. A Basel Permit is obtained from the South Africa Environmental Department through the Swaziland government and in 2013/14, a total of 15 tons of hazardous waste was removed under this permit system.

All operations hold relevant waste management permits as prescribed by country legislation. In South Africa, operations have been registered as waste generators in terms of the Waste Management Act of 2008. Outside of South Africa, operations are developing internal waste management strategies in order to provide suitable systems for waste disposal, including the licensing of hazardous and general landfill sites, as well as the regular monitoring of effluent and emissions.

In the year under review, the company generated 10 283 tons of non-hazardous waste and 1 707 tons of hazardous waste. Of the non-hazardous waste, 49% went to landfill, 42% was recycled, 3% reused, with the balance being composted, incinerated or stored on site.

Comparative table in tons showing percentage improvement 
  2014  2013  % Improvement 
Non-hazardous waste  10 283  14 901  31 
Hazardous waste  1 707  2 183  22 
Recycled waste  4 272  2 831  51 
Send to landfill  5 083  11 027  54 

Materials

Input materials used are relevant to the company’s sustainability as they impact on our contribution to:

  • the conservation of the global resource base;
  • efforts to reduce resource intensity; and
  • management of the operations’ overall costs.

Where practical, we use input materials, in both cane growing and sugar and downstream processing, that promote environmental responsibility. Factory by-products, in the form of filter cake, vinasse and boiler ash are applied to the fields, while herbicides, pesticides and fungicides are applied at an average rate of less than one litre per annum for every seven tons of cane grown. Various chemicals are used in both sugar and downstream processing, with the biggest quantities being, 664 000 litres of sulphuric acid, 7.026 million litres of hydrochloric acid, 453 000 litres of phosphoric acid, and 4.745 million litres of flocculent in 2013/14.

Associated with the above, Illovo used 545 000 litres of oils and lubricants which are reused or recycled. The packaging material for certain product lines is eco-labelled to reflect recyclable packaging material while bulk sugar is transported in one-ton polypropylene bags considered to be durable, reusable and recyclable, thereby delaying early landfill site disposal. A total of 8 600 tons of packaging material was used during this reporting period.

Effluent

The effluent produced outside South Africa is, after treatment to an acceptable level, disposed of under permit into water courses, except for our operations at Dwangwa and Glendale, where the effluent is retained in dunder dams and then used for irrigation. Treatment outside Malawi varies from lime application to being mixed with clean water or being retained in settling maturation ponds, before discharge into rivers/waterways.

In South Africa effluent is, after various treatment processes at our different sites, discharged under permit either into rivers, the sea, settling dams, a municipal sewage works, or, as is the case with the Glendale distillery, used for irrigation under controlled conditions. The majority of operations measure the quality of effluent discharged in terms of COD, biochemical oxygen demand, total suspended solids, total dissolved solids and acidity (pH).

Effluent produced 
m3  Malawi  Mozambique  South Africa  Swaziland  Tanzania  Zambia 
2014  48 239 215  6 089 024  2 706 726  53 395 200  57 102 409  76 162 846 
2013  47 462 702  5 040 840  2 184 201  42 163 200  48 041 992  80 691 387 

These figures have been restated for the 2012/13 season following an extensive water footprint exercise. 

Biodiversity

We operate over vast tracts of land, some of which are situated in close proximity to areas of potential sensitivity. The protection of biodiversity is addressed formally in new projects through environmental impact assessments (EIAs) and in existing agricultural operations through managing farming activities according to field conservation guidelines as advocated by the SASRI, so as to ensure agricultural production on a sustainable basis with limited impact on the environment.

Illovo makes every effort to preserve and manage the natural surrounding areas, as well as certain areas within the group’s operations due to their high conservation status. We are mindful of our potential impacts on these areas and accordingly support a number of initiatives to preserve ecosystem integrity and protect biodiversity. These include:

  • management of the Mhlongsinga Nature Reserve at Ubombo in Swaziland;
  • management of the Nyala Park at Nchalo in Malawi;
  • continued support of the Mwananchingwala Conservation Area adjacent to the Nakambala estate in Zambia;
  • continued support of conservation projects to protect the Magombero Forest adjacent to the Kilombero estate in Tanzania;
  • ongoing support of the Malawian Government Re-forestation Initiative; and
  • ongoing surveys for invader species and the implementation of an eradication plan to protect riverine adjacent to steep forested areas not under cane at Sezela in South Africa.

As with any agricultural commodity, there is always the risk of a pest or disease outbreak resulting in a negative impact on crop yield and/or quality. With Eldana saccharina being a major pest in the South African sugar industry, Illovo adopts an integrated pest management system (IPM), a sustainable approach to pest management which relies on a number of preventative and control practices. Habitat management is just one of the tools in the IPM basket that growers are implementing to control Eldana. In collaboration with the SASRI, the Sezela operation has implemented this habitat management approach to determine the impact of such a system on Eldana infestation on a field basis.

Investing in environmental compliance

Illovo continues to invest in environmental improvements. These investments are based on a precautionary approach ensuring that cost-effective measures to prevent environmental degradation and improvements to environmental management systems are realised:

  • use of cleaner fuel, energy efficiency and resultant ghg emission reduction at Merebank;
  • understanding our water footprint and planning for sustainable water resource management resulting in a detailed water management strategy;
  • planning improvement of waste water treatment infrastructure in Kilombero, Nchalo and Ubombo;
  • research and development into wastewater treatment technology whereby biogas can be generated from anaerobic digesters using effluent created on-site;
  • improving guiding procedures to facilitate accurate data reporting;
  • implementing limited assurance processes on specific environmental KPIs though environmental resources management (ERM), KPMG and IRAS; and
  • on environmental protection, Illovo spent R1.3 million on waste disposal, emission treatment and remediation costs and R1.9 million on prevention and environmental management costs.

Environmental compliance

No enforcement notices, environmental prosecutions or environmental citations were issued to any of the group’s operations and no fines or penalties were imposed. We encourage and plan interactions with local government authorities to discuss changing environment legal requirements and solicit clarity where aspects impact on our operations. As a result, there were 29 visits by environmental authorities across all our operations.

Illovo recognises that water is a global resource that requires local management and as a consequence is currently implementing a water footprint strategy so as to optimise the use of water and hence, energy per unit of production.