Britain's cane sugar refiner sees only upside to hard Brexit

By Helen Reid

LONDON (Reuters) - Once a week, a bulk freighter sails up the River Thames to a refinery in the docks of east London to offload tonnes of brown raw cane sugar - just over half the traffic prior to tighter EU rules introduced in 2009.

Now, the near 140-year-old Tate & Lyle Sugars refinery says it can see light at the end of the tunnel as Brexit offers the hope of a repeal of European sugar legislation it says is harming its business.

Best known in Britain for producing Lyle's Golden Syrup, a household brand sold in distinctive green and gold tins since 1882, TLS argues against the idea that Brexit will be bad for British business.

"For us the real uncertainty was the status quo," senior vice-president Gerald Mason said.

Mason says being free of European rules will provide the opportunity to bring production back to previous levels and make the company competitive with beet sugar producers at home and across continental Europe.

"Leaving the EU is the biggest opportunity of our lifetime."

TLS, which was split from parent Tate & Lyle Plc when U.S.-based ASR Group bought TLS in 2010, has found itself increasingly on the wrong side of EU rules for the sugar sector.

Tariffs on raw cane sugar entering into the 28-nation bloc are designed to protect Europe's sugar beet growers and to promote trade with cane growers among a group of former European colonies in Africa, the Pacific and the Caribbean.

Those tariffs have long hurt cane refiners such as TLS, who want to buy the cheapest raw material on the market from producers such as Brazil tariff-free.

The money from tariffs finds its way to rival beet sugar refiners in the form of subsidies for EU beet farmers, he said.

"We can be spending as much as 3 million euros in import tariff per ship," Mason said, as a bulldozer dug into mounds of raw cane sugar from Fiji, Guyana and Australia in the cavernous warehouse.

The refinery is operating at half capacity, producing 550,000 tonnes of sugar, down from 1.1 million tonnes in 2009.

Where up to 80 ships a year offloaded at the jetty, now 40-50 ships arrive. In 2015, the firm made a 25 million-euro loss and Mason had to cut 50 jobs.

SEEKING A CLEAN SLATE

While EU beet sugar producers see the import levy as a legitimate way to protect a key agriculture market, in Britain there was consensus over the damage being done by the policy.

"We all agree that it was disadvantageous to Tate & Lyle [Sugars]," said Neil Parish, a lawmaker who chairs parliament's Environment, Food and Rural Affairs Committee.

But the vote is not a panacea to TLS. EU regulations are likely to remain in place until the formal exit in March 2019.

Mason said he was seeking talks about future regulation with the domestic beet sector, which is unlikely to share his enthusiasm for a regulatory "clean slate" and exiting the EU customs union - commonly understood as a "hard" Brexit.

Led by Associated British Foods (ABF.L) unit British Sugar, Britain's beet sector produces 1 million tonnes of refined sugar a year - about half of British consumption.

The company was also beginning to woo government, providing its familiar golden syrup at a breakfast Brexit panel on the fringes of the ruling Conservative party conference. Government should repeal the legislation "on day one" after Britain's formal exit, Mason said.

In the run-up to the referendum Mason felt European institutions were complacent, assuming Britain would remain.

Had Brussels agreed to scrap the regulations it could have shown that Europe was willing to change, and perhaps the result would have been different, he said.

"That's history now."

(Editing by William Schomberg and David Evans)