In Babylon, sugar refinery gives hope at the darkest of times

Claudiu Covrig reflects upon his invitation to see the new Etihad sugar refinery in the ancient heart of civilization, and contemplates what it means for the battered and troubled land, and the wider sugar landscape of the Middle East.

Babylon. The land is the stuff of legend; the cradle of civilization and a land of gods and prophets stretching back across the millennia. Today, however, the heart of Iraq is shattered – in a land that hasn’t known peace for almost forty years, hope amidst the desolate, ancient landscape is the most precious commodity.

I flew from Turkey into Najaf, some 180 km south of Baghdad, and the host of one of the slender air bridges that is slowly reconnecting the region to the outside world. Described as a ‘safe zone,’ it’s all still relative. My final night in Iraq was marked with a major security scare after a bomb exploded in the nearby town of Hillah. Driving north-northeast for an hour and 40 minutes in an armored convoy brought me to the new Etihad refinery.

The refinery stakes a claim for the biggest private-sector employer in the country, with some 1,200 people based here, including some 300 drivers charged with ensuring the refinery has raw sugar to run on. Within the compound, the machinery glints in the morning sun, all the equipment new and metallic – juxtaposed against the devastation that is all too evident around.

Staying connected is no mean feat; a refinery of this size — 1 million mt a year capacity, with plans to move it to 2 million by 2018 — is supplied entirely from the sea, from Um Qasr seven- to eight-hour truck drive away. All that raw sugar has reversed the flow into the country – once a whites importer, the country’s needs are now met from the new facility, which opened around a year ago. All the raw sugar prices against a Platts Brazil price, since the vast majority of the supply comes, unsurprisingly, from Brazil.

While the machinery is built to exacting German standards by Czech and German specialists, the local workforce is a smattering of nationalities, including Iraqi, Syrian, Egyptian, Indian and Pakistani, with most working in three shifts as the facility strives for continuous production. And the refinery boasts capacity to produce sugar of a 16 ICUMSA, although much of the quality will meet 35. It also has the flexibility to bag in a range of sizes, from 1 kg to 1 mt across 14 lines, currently clocking a maximum bagging speed on its 50 kg line of 14 bags in one minute.

Fully standalone, the refinery generates its own steam for 20 MW electricity production, using locally sourced and cheap heavy fuel oil.

Demand is the key element bringing the facility here – Iraq’s population surges at a rate of one million people a year, and key tie-ins with major internationally renowned soft drinks manufacturers and government backing in domestic supply make the venture an attractive one, providing employment and ownership of a key plank in the country’s food supply. And, alongside the new refinery, an edible oil refinery is under construction too, and here the MOT disagrees with Etihad’s appraisal of demand. While the Iraqi government forecasts demand of 1 litre per capita per month, Etihad’s owners place the real consumption at around 2.5 litres per capita per month

Population estimates are patchy — it’s impossible to know how many people live in Iraq at the moment, but it may well be upward of 37 million people, with the Ministry of Trade estimating white sugar consumption at anything from 74,000 to 80,000 mt a year.

That link to the outside world, the long hard road from Basra to the threshold of Baghdad, is bolstered by the location’s storage capacity — two huge warehouses with a capacity of 160,000 mt each gives over a quarter of a million mt of raw storage, while white has a storage capacity of about 180,000 mt across two warehouses.

So, for the sugar world for the time being one thing is certain: Iraq is back in the sugar business and holds the potential to supply white sugar over an extended area beyond its borders, and creating constant demand for global raws.

I left the refinery and then Babylon with hope in my heart; hope that things are finally settling down in this country so hardly tried in recent years; hope that the new generations will find their ways towards peace and development to follow their ancestors and inherit the legacy fit for one of the great civilizations of the past.