KSL Expands Production Capacity, Building New Sugar Factory, and Pushing itself Towards Net Zero

The cane and sugar industry is highly volatile, both due to prices that must reference the global market and the reliance on natural rainfall. This results in sugarcane and sugar management being a challenging endeavor every year. Earlier this year, there were concerns about the El Niño phenomenon, with fears that drought could impact production. However, by mid-year, signs of La Niña became increasingly severe, while the costs of agricultural materials also rose. Additionally, various trade barriers have further complicated the situation, making the final sugar products still have to compete with foreign markets. 

However, the pressures from these challenges have instead driven Thai sugar industry operators to develop innovations that enhance their businesses, creating opportunities and generating income while simultaneously planning for a future with reduced greenhouse gas emissions.  

Thai media interviewed Mr. Chalush Chinthammit, Chief Executive Officer and President of Khon Kaen Sugar Industry Public Company Limited (KSL Group), about revitalizing the sugarcane and sugar industry. 

Sugar prices are at their highest in 12 years 

The trend in sugar prices has shown a 30% increase due to a surge in global market prices, reaching 25-26 cents per pound in the first half of the year, the highest in 12 years. The average global sugar price for this year is projected to be around 22-23 cents per pound, driven by a decrease in sugarcane production due to drought. 

For the 2024/2025 season, the overall sugarcane production in Thailand is expected to reach 90-100 million tons, an increase from the 84 million tons processed in the 2023/2024 season. This increase is attributed to improved rainfall compared to the 2023/2024 season, which experienced drought conditions that led to a reduction in sugarcane planting areas. 

For KSL, the sugarcane crushed in the 2023/2024 production season decreased by 20% to 5.43 million tons, down from 6.60 million tons in the 2022/2023 season. However, KSL Group’s sugarcane production for the 2024/2025 season is expected to be around 6.5 million tons, an increase of 10% from the 2023/2024 season.  

“We expect revenue in the second half of the year to increase by about 10% compared to the first half, which experienced volatility due to a reduction in sugarcane volume caused by drought conditions and delays in customer deliveries. For the entire year, we anticipate revenue to be close to that of 2023, or approximately 18,695 million baht. This revenue is expected to come from sugar business (80%), electricity business (10%), and subsidiary businesses from the joint venture with BBGI (10%),” addressed Mr. Chalush. 

Regarding the shareholding in BBGI Public Company Limited (BBGI), KSL Group has seen increased profits due to significantly higher sales of biodiesel and ethanol. The merger of Bangchak Corporation with Esso has also greatly benefited KSL Group. In 2025, BBGI is expected to record increased profits from the Sustainable Aviation Fuel (SAF) production project, which is set to begin production in May 2025. 

The Sa Kaeo factory to begin operations in December 2024 

The new sugar factory being built in Sa Kaeo province is expected to be ready for operation by December 2024. It aims for an initial production capacity of 20,000 tons of sugarcane per day to boost production capabilities. It is expected to increase production capacity by approximately 500,000 to 600,000 tons per year. Additionally, it will have a power generation capacity of up to 35 megawatts per day. 

Currently, there are five factories in Thailand. The old factory in Chonburi has been shut down and a new one has been built in Sa Kaeo. There is also one factory in Laos, which was established alongside the investment in Cambodia. However, the Cambodian factory ceased operations 4-5 years ago due to an insufficient supply of sugarcane for production and unfavorable weather conditions for cultivation, making the output not worthwhile to continue the business. 

Towards other kinds of business 

Exploring new business opportunities with surplus electricity sounds like a great idea. Selling the excess power to other businesses, like those running hydroponic or pesticide-free vegetable farms, is a smart move. Since these farms require electricity for their operations, it is a natural fit. KSL Group could leverage the available land near the factory to set up these greenhouses and supply them with its surplus electricity. Finding partners for these ventures could help scale up the operation and maximize the benefits. The question is whether it is already in talks with potential partners or just starting to explore this idea? 

Using  the company’s own sugar in the coffee shop is a clever way to utilize its by-products. Exploring other business opportunities that build on these by-products can definitely add value. It is understandable to be cautious about diving into bioplastics or similar fields if the market isn’t ready to support higher-priced items. Are there other specific industries or product ideas it is considering for leveraging the company’s by-products? 

Kane’s Low GI sugar presently into the health market.  

The sugar, produced using the patented Nucane technology, preserves polyphenols from natural sugarcane, providing antioxidant properties and slowing the absorption of sugar into the bloodstream. It caters to health-conscious consumers and those with chronic conditions. The product has set a new standard in the health food industry by combining taste with health benefits. Since its launch, Kane’s sugar has received a positive response, with production reaching around 1,000 tons per year. 

KSL Group’s development of Low GI sugar driven by a commitment to business growth and consumer health.  

The goal is not only to expand its business but also to focus on long-term consumer health and sustainability. The company emphasizes environmentally friendly practices throughout its operations, including sourcing raw materials and using agricultural machinery to reduce PM 2.5 emissions. It has continuously collaborated with the cane growers’ association to achieve these objectives. 

KSL Group is also focused on reducing greenhouse gas emissions in their production processes. It received Carbon Footprint Product and Carbon Footprint Reduction labels in 2022. The company aims to achieve carbon neutrality by 2045 and to reach net-zero greenhouse gas emissions by 2060. 

Source: Prachachat Business