Dutch development lender FMO is providing ZAR333.33 million ($19.8 million) in financing to South Africa-based Gledhow Sugar Company to support the expansion and modernization of its sugar mill in KwaDukuza, KwaZulu-Natal.
In a disclosure, FMO said the financing will fund the installation of newer and more efficient equipment designed to reduce steam use and improve the mill’s energy performance.
It will also support Gledhow’s transition away from coal toward power generation using bagasse, a renewable biomass by-product of sugarcane processing.
Gledhow is a long-established sugar mill that processes sugarcane supplied by a broad base of farmers and supplies refined sugar to food and beverage manufacturers across Southern Africa.
The investment is aimed at modernizing a key agro-industrial employer in a rural area where job opportunities are limited and economic activity remains closely tied to the sugar industry.
Around 26,000 people in the region are estimated to rely on Gledhow for their livelihoods, underscoring the mill’s role as an anchor of the local economy.
For FMO, the transaction combines climate finance with inclusive growth. The financing is expected to qualify fully under its Green Label and Reducing Inequalities Label, reflecting both the project’s energy-efficiency and greenhouse gas reduction benefits, as well as Gledhow’s sourcing from small-scale or marginalized communities.
The shift to bagasse-based energy generation is significant for agro-processing businesses, particularly in markets where industrial operations remain dependent on fossil fuels.
Bagasse, which is left over after sugarcane is crushed, can be used to produce heat and power for mill operations, reducing reliance on coal while improving resource efficiency.
The project also reflects a broader trend among development finance institutions to back the decarbonization of existing industrial assets.
Rather than financing only new renewable energy projects or greenfield infrastructure, DFIs are increasingly funding upgrades to legacy businesses that remain critical to employment, food supply chains, and rural incomes.
In Gledhow’s case, the financing supports both production efficiency and supply-chain resilience.
By improving the mill’s operating performance, the investment is expected to help sustain demand for sugarcane supplied by farmers, including smaller producers and communities that rely on the mill as a stable offtake channel.
The project has been categorized as B+ for environmental and social risk.
Applicable IFC Performance Standards cover environmental and social management systems, labor and working conditions, resource efficiency and pollution prevention, and community health and safety.
FMO said the risks are manageable with appropriate measures and resource capacity, supported by a targeted Environmental and Social Action Plan.
The transaction highlights how climate-linked development finance is expanding into traditional sectors such as agriculture and food processing.
These industries are often difficult to decarbonize but remain central to emerging-market economies, making efficiency upgrades and cleaner captive power generation an important pathway for reducing emissions without disrupting rural livelihoods.