Tate & Lyle invests $175m in growth

28/07/05 Tate & Lyle has announced a US$175 million investment in growth in the US.

Tate & Lyle announced a £57 million (US$100 million) expansion to its Sagamore facility in Lafayette, Indiana to increase capacity for food ingredient products. This will contribute to the delivery of Tate & Lyle’s strategy to grow the contribution from value added products. The project includes investment in substantial environmental improvements.
 
Subject to regulatory permit approvals, construction will begin later this financial year and the new capacity is scheduled to be operational by January 2007. The project is expected to cover the Group’s cost of capital in the first full year of operation.
 
The Sagamore plant is Tate & Lyle’s primary US production site for modified food starches and is the flagship site for value added dent and waxy based food starch products.  These products are used in a wide array of dairy, beverage, baking, snack, and dressings. Tate & Lyle has been successful in growing these markets and without this expansion production capacity at the plant would have become a constraint. This expansion is part of the Group’s investment in growth. 
 
“We have undertaken significant work to understand and anticipate changing consumer preferences and eating habits, and how the food processing and food service industries will respond to these trends,” said Iain Ferguson, Chief Executive of Tate & Lyle.  “The cumulative impact of this work coupled with our greater understanding of, and deeper involvement with, our customers is that we recognize the need for investment in modified food starch and maltodextrin at Sagamore to meet growing demand.

Tate & Lyle is also planning a £43 million (US$75 million) expansion to its Loudon, Tennessee, facility. It will enable Tate & Lyle to increase production of value added products and will also supply substrate for the new joint venture, DuPont Tate & Lyle BioProducts, LLC (being constructed adjacent to the facility) which will produce 1,3 propanediol (Bio-3G), the key building block for DuPont Sorona. Ethanol capacity will also be increased by 37 million gallons per year. There will be no increase in high fructose corn syrup capacity.
 
Tate & Lyle said that by implementing proprietary technology, the expansion will both dramatically increase starch yields and reduce per unit energy consumption. The project includes investment in substantial environmental improvements. Subject to regulatory permit approvals, construction will begin later this financial year and the new capacity is scheduled to be operational in October 2007. The project is expected to cover the Group’s cost of capital in the first full year of operation.
 
“The investments in both Sagamore and Loudon reflect our firm commitment to deliver against our strategy to grow our business, and in particular to grow the contribution from value added products. The expansions will increase the corn grind and demand for locally sourced crops whilst the environmental improvements are designed to reduce emissions and reflect Tate & Lyle’s commitment to environmental performance and to the surrounding community,” said Ferguson.