Tana 3S acquired 15.000 hectares of quality land at Kitangale Ranch next to the Tana river under a 30 years Lease agreement .
Each year 2.500 hectares of land will be prepared for high yield sweet sorghum plantation.
The full land conversion is expected to be completed by 2020.
Sorghum grains will be sold to the Food and Feeds Processors industry in Kenya.
Sugar Syrup for ethanol production will be produced from Sweet Sorghum stems in scalable production units.
In the first two years, the syrup will be sold to local distilleries.
An ethanol fermentation & distillery and cogeneration unit will be installed in 2020, once 10.000 ha. of converted land will be in full sweet sorghum feedstock production.
Investment Rationale and Key Drivers
Kenya suffers from a a structural ethanol & sugar molasse production deficit.
As result of high import cost, the price of Ethanol in the Kenyan domestic prices is 30% higher than international prices.
Sorghum grain prices are 50 to 60 % higher than in the USA.
Global ethanol prices are due to increase as result of raising US imports (sugarcane based ethanol is the cheapest alternative to fill the advanced Biofuel mandate).
Sweet Sorghum grain, syrup/ ethanol, beef industry &electricity sales create multiple source of revenue reducing exposure to price fluctuations.
Ethanol from Sweet sorghum is 40 to 50 % cheaper to produce than sugarcane ethanol (Cost of cultivation of sweet sorghum is 3 times lower than sugarcane).
The investment in syrup production units are scaled to correspond to sorghum plantation area increase.
Ethanol production unit investment is realized only once the agro & syrup production operations come up to speed.
For agro-industrial investors, Kenya offers unique advantages: a stable economical & political environment, easy access to markets, developed agricultural services & good road logistics.
The Tana River region offer some the best land investment opportunities:
Top quality soils, 650 mm annual rainfall, high irrigation potential proximity to ports and consumption centers.
3 crops per year under irrigation.
Land lease cost is a bargain compared to ethanol producing countries such as Brazil.
Project objectives and philosophy
The project seeks returns above 35 % IRR while offering exceptional investment safety.
With the production of Food Sorghum & Soybean Grains, Ethanol from Sweet Sorghum stalks and Electricity from Waste Biomass, Tana 3S is a model for Bioenergy production and GHG reduction which does not give rise to controversy regarding food to fuel arable land conversion.
Impact on ecological system & water resources is minimal.