Olam International, the Singapore based agricultural commodities trader is going to invest US$128.4 million in a Nigerian sugar refinery and wheat mill.

According to CEO Sunny Verghese, Olam will acquire a 49% stake in two joint ventures with Lagos-based Modandola Group.

Olam will contribute $91 million for a 49% stake in a new sugar refinery with a capacity of 750 000 tonnes. The facility is expected to come on-stream in January 2011.

Nigeria, with its population of close to 150 million people is the second largest consumer of sugar in Africa. It is expected that annual demand will surge to 2 million tonnes within the next five years.

Olam will import raw sugar from Brazil for processing in Nigeria taking advantage of only a 5% tariff on raw sugar while a 55% duty on refined sugar exists.

For the wheat mill operation Olam will pay $32.5 million for a 49% share in Standard Flour Mills. The mill has a operating capacity of 1 200 tonnes a day. Olam will invest a further $4.9 million to raise this capacity to 2 000 tonnes.