New Orleans, Feb. 9 - Thursday's deadly explosion at Imperial Sugar's (IPSU) Savannah, Ga., plant, could leave one of the U.S.'s top refineries shut for some time and might require sugar to be diverted to other facilities owned by competitors in Florida or on the East Coast, industry members said Friday.
The U.S. Chemical Safety Board has sent investigators to the plant, where Thursday's fire caused at least four fatalities, hospitalized more than 50 people and closed river traffic.
Imperial Sugar President and CEO John Sheptor said Friday that "as far as we know, it was a sugar dust explosion." The fire started in a storage silo where refined sugar is kept before packaging, he said.
But beyond those remarks, "no one here is making any comments right now," a company representative at Imperial's Sugar Land, Texas, headquarters said Friday afternoon.
Imperial Sugar has been a major player in the U.S. sugar industry's steady cane-and-beet consolidation in the last 20 years or so. The company acquired Savannah Foods & Industries Inc., then the second-biggest sugar refiner, in 1997, making Imperial the leading U.S. processor and refiner. Before that, Imperial took over Spreckels Sugar Co., a California beet company, in 1996 and Holly Sugar Corp., a Colorado Springs beet processor, in 1988.
As for Thursday's accident, "at this point, we don't know how long the plant will be out," a New York sugar desk trader said Friday. "We'll have a better idea by early next week."
If needed, several facilities owned by competitors could process sugar that's normally handled by Savannah, industry members said. In the tangled world of U.S. sugar-plant ownership, Domino Sugar Inc. and a Yonkers, N.Y., plant, are controlled by Florida Crystals Corp. and the Sugar Cane Growers Cooperative of Florida under parent company American Sugar Refinery Inc.
Domino's huge Baltimore plant processes sugar brought in from other countries. To the south and west, Domino also owns a similar-sized refinery in Chalmette, La., mostly processing domestic sugar, and a plant in Crockett, Calif., using imported and domestic raws. U.S. Sugar Corp. owns the nation's newest refinery in Clewiston, Fla.
Thursday's accident follows an explosion that damaged Domino's Baltimore refinery three months ago. That plant made repairs and soon reopened but the cause of the fire is still unclear, with dust collection suspected as a possible cause.
Traders said Thursday's Savannah explosion had no meaningful impact Friday on ICE Futures U.S. domestic (No. 14) sugar prices, which ended lower.
Dust explosions are fairly common and costly across U.S. and foreign food, paper, petrochemical and pharmaceutical industries, according to scientists. In the refining process, a sugar dust cloud can develop and then be ignited by heat and oxygen.
A study released in late 2006 by the U.S. Chemical Safety and Hazard Investigation Board found that in the past 25 years, 119 workers were killed and 718 were injured in 281 dust fires in 44 states, with some of those accidents at sugar refineries.
Meanwhile, Imperial sells several of the country's top sugar brands - Imperial, Dixie Crystals and Holly - and supplies sugar and sweetener products to food manufacturers.
Imperial's CEO John Sheptor took the reins from Robert Peiser in January in a succession that was announced last November. Sheptor joined the Texas-based company as executive vice president and chief operating officer in February 2007.
U.S. sugar supplies are controlled by the U.S. Department of Agriculture through marketing allotments on producers and tariff quotas for more than 40 exporting countries. The program operates at no cost to U.S. taxpayers.