May 28 (Bloomberg) -- Illovo Sugar Ltd., Africa’s largest sugar producer, said it has ended its involvement in the Markala sugar project in Mali because of incomplete funding and a deteriorating security situation in the West African nation.
The project involves the development of a plantation that would produce 190,000 metric tons of sugar and 15 million liters of ethanol a year, according to the United Nations food agency. The government was expected to contribute about $240 million to develop the agricultural component of the project, while private companies would spend about $300 million on an industrial component, including a sugar mill and ethanol plant, the Rome-based Food and Agricultural Organization said on its website.
The government’s failure to provide concessional funding and meet its other obligations “together with the deteriorating security situation in Mali and the country’s uncertain political future have increased the project risks,” Mt. Edgecombe, South Africa-based Illovo said in a stock exchange filing today. “The group’s investment in pre-project expenditure associated with this project totaling 173.5 million rand ($21 million) has been fully impaired and written off.”
Soldiers ousted Malian President Amadou Toure on March 22 because of discontent about the resources that the government was dedicating to fight Touareg rebels in the nation’s northern region.
The Markala project is situated 275 kilometers (171 miles) north of the Malian capital, Bamako.
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