Tongaat Hulett Zimbabwe to lay off 1,000 employees by August

A tractor carries harvested sugar cane to be processed at Tongaat Hulett's Hippo Valley Estates plant in Chiredzi, Zimbabwe June 21, 2024. REUTERS/Nyasha Chingono/File Photo

The company, one of Zimbabwe's largest employers with a workforce of 16,000, has been grappling with rising labour and fertiliser costs, as well as significant losses linked to the country's unstable currency.

The move comes as the company seeks to navigate inflationary pressures and stabilise its operations in the face of Zimbabwe’s economic turmoil.

Tongaat Hulett operates Zimbabwe's two sugar mills with a combined capacity to crush 3.5 million tonnes of sugar cane annually.

Rising challenges amid hyperinflation

Businesses in the southern African country have endured an extended crisis which has decimated its currency and fuelled episodes of hyperinflation since the turn of the century.

Tongaat Hulett Zimbabwe spokesperson Dahlia Garwe told Reuters that 500 employees from each of the company's mills in Hippo Valley and Triangle will be laid off in three phases between February and August.

"It is very difficult to manage such a large workforce, so we need to look at ways and means of becoming a lot more efficient in how we do our business," Garwe told Reuters by telephone.

Profit margins decline amid rising labour costs

The company says profit margins have plunged 55% since 2022, while labour costs have soared 113%, leaving the sugar entity with huge debts.

"It is part of a strategy to bring our costs under control and put the company on an even path," Garwe said.

Tongaat Hulett Zimbabwe has said its "unprecedented operational challenges" were not related to the business rescue process currently underway at its South African parent company. Tongaat Hulett's South African operations entered business rescue proceedings in October 2022 following an accounting fraud scandal.

Tongaat Hulett is in the process of selling the Zimbabwe assets, made up of the wholly owned Triangle Sugar Estates and a 50.3% stake in Hippo Valley Estates, to a Mauritius-registered investment company as part of the business rescue plan.