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June 19, 2011

Swiss trader expands into ethanol in Sierra Leone

by Matthew Saltmarsh

Jean Claude Gandur, a Swiss commodities trader, made a fortune during the 1990s buying oil concessions in Africa that others did not want or could not hold. Now a billionaire, he is poised to swim against the tide again with a major expansion into ethanol in Sierra Leone, the West African country still recovering from a decade-long civil war that ended in 2002.

One of his companies, Addax Bioenergy, was set to sign a loan agreement with six international lenders including the African Development Bank, the Netherlands Development Finance Company and the German Investment Corporation. The 258 million euro ($366 million) project near Makeni, in central Sierra Leone, will convert sugar cane into bioethanol for European and domestic markets.

The move again has stirred controversy as ethanol is being partly blamed for rising food prices. And it comes at a time of renewed criticism from advocacy groups worried about an exploitation of developing countries amid the global scramble for resources as food prices climb.

The Oakland Institute, a social development group based in California, warned this month in a report of a “land grab” under way, whereby investors including hedge funds are driving farmers off their land in Africa to make way for new industrial farming projects to profit from rising food prices.

Mr. Gandur said that despite concerns about the effects on farm markets, he thought that ethanol had a viable and profitable future, if managed properly.

The Addax project will be the largest investment so far in Sierra Leone’s agricultural sector and includes a new sugar cane estate, an ethanol refinery and a biomass power plant for the refinery and the national electricity grid. Construction begins this year, and the project is expected to be operational in 2013. It employs over 500 people and will create more than 2,000 jobs, according to Addax. The land will be leased from local landowners and tribal chiefs.

Mr. Gandur is no stranger to controversy....

He built his oil unit, Addax Petroleum, from scratch before selling it in 2009 to Sinopec, the Chinese oil company, for 8.4 billion Canadian dollars, or $8.6 billion at current exchange rates, taking $3.5 billion himself.

Addax says that it complies with social and environmental standards ...

“That’s why I don’t feel guilty of doing anything immoral,” he said. “On the contrary, if other countries cope with the same model, we can give a chance to Africa to employ people. Without being na├»ve, it’s a good way to bring back agriculture in Africa.”

But according to the Oakland Institute, by early 2011, close to 500,000 hectares, or 1.2 million acres, of farmland in Sierra Leone had been leased to or were under negotiation for lease by foreign investors, representing almost 10 percent of 5.4 million hectares of land suitable for farming by small landholders, which employs about half the population. It also cited food security risks and questioned the level of genuine interaction between the project and illiterate local farmers.

“The conditions surrounding agricultural investments in Sierra Leone are ripe for exploitation and conflict,” the institute said.

Duncan Pruett, an adviser on land rights at Oxfam, said that generally, biofuel production in poor countries “is a double blow for poor and hungry communities.” Land, he said, was often given away to investors or governments on abusive or unfair terms, and large-scale plantations often created little employment or food for local consumption. And diverting food into biofuel production “is also a key driver of high and volatile food prices, which spell hunger for millions of men, women and children,” he said.

Gandur has been wounded by insinuations that he had to grease dictators’ palms to succeed. “I didn’t build Addax on getting acreages from governments under the table,” he said. “We have never paid money to anyone to get acreage in Africa, never.”

full article...New York Times

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