Tobacco Asia

46 tobaccoasia MANUFACTURING NEWS 制造新闻 The situation worsened during the Covid-19 pandemic. Marroco said BAT warned the administration of president Cyril Ramaphosa that a months-long ban on the sale of alcohol, tobacco, and vaping products in 2020 would strength- en illegal trade. BAT South Africa later challenged the prohibi- tion in court, arguing that the measure would entrench the illicit market. Marroco said authorities have yet to reduce illegal sales to "meaningful levels" since the pandemic. Zimbabwe: Ethical Plans Cigarette Manufacturing Ethical Holdings plans to begin producing cigarettes through a toll-manufacturing agreement with a Chinese partner, a move the company says will support value addition in Zimbabwe's tobacco sector and increase export earnings. The initiative aligns with the government's Tobacco Value Chain Transformation Plan, which aims to shift the industry away from exporting raw leaf and toward higher-value local manufacturing. While several companies participate in tobacco farming and processing, British American Tobacco and Pacific Cigarette Company currently dominate finished cigarette production for the domestic market. Under the tolling agreement, the company will produce about 8 million cigarette sticks each month. Zimbabwe has an overall manufacturing capacity of about 17 billion sticks per year, according to the Tobacco Industry and Marketing Board (TIMB). The new production line marks Ethical's transition into a fully integrated tobacco company that manages the entire chain from primary production and auction sales to value-added manufacturing. Ethical Holdings general manager Tendai Ngongoni said the company will soon introduce the cigarettes as part of efforts to support the country's beneficiation strategy. "In terms of driving value addition and beneficiation, we will start producing cigarettes very soon to support the Government's Tobacco Value Transformation Plan," Ngongoni said. Authorities aim to raise value addition to 25% under the transformation plan. US: ZYN Plant Starts Before Completion Philip Morris International (PMI) started production of its ZYN nicotine pouches at a new manufacturing facility in Aurora, CO, USA, located south of Denver International Airport. Production and worker training have begun in completed sections of the 600,000-square-foot factory as construction continues on the rest of the site. About 800 construction workers are finishing the remaining portions of the facility. Through its subsidiary Swedish Match, PMI plans to invest US$600 million in the Aurora project. The factory will become 1 of 3 US plants producing ZYN pouches. Local authorities have approved several incentives for the project. Aurora will provide US$7.1 million in tax rebates, while the Colorado Economic Development Commission has approved US$4.5 million in job growth incentive tax credits. Adams County has also agreed to provide US$4.3 million in incentives. PMI has hired about 120 employees toward a planned workforce of 500 at the Aurora facility. The plant will serve as the company's second US ZYN manufacturing site after its facility in Owensboro, KY. The company expects the average annual wage to reach about US$90,000. PMI announced the project in July 2024 and moved quickly to develop the site amid strong demand for nicotine pouches. ZYN sales have grown at triple-digit rates in recent years and now represent an estimated 70% to 80% of nicotine pouch sales in the US. Wendy Mitchell, president and c.e.o. of the Aurora Economic Development Council, said the decision to offer incentives focused on job creation and long-term economic growth. "From an economic development perspective, attracting employers that invest at this scale, strengthen the local tax base, and contribute to sustained community growth is precisely the type of opportunity Aurora seeks to advance," she said. Mitchell added that the project could support 1,000 indirect jobs in addition to the 500 positions at the plant and generate about $550 million in annual economic benefits. Construction on the roughly 150-acre site began in late 2024 in the Sun Empire development near 56th Avenue and Harvest Road. PMI said the first ZYN pouches produced in Aurora entered the market in September, although work continues on several sections of the facility. Ukraine: PMI Warehouse Damaged in Kharkiv Philip Morris International has estimated at least US$16 million in damages after a Russian strike in January destroyed part of a warehouse complex in Kharkiv, according to the chief financial officer of the company's Ukrainian unit. Serhii Kalnoochenko told Forbes Ukraine that the attack tore through a finished goods warehouse and damaged a storage facility for raw materials. Fire engulfed about 5,000 square meters of the site, and the company continues to assess the full scale of the losses nearly a month after the strike. The prelimi- nary estimate includes damage to buildings and the materials stored inside. No casualties occurred during the attack. The factory had halted operations in 2022, and only security staff remained on the premises when the strike hit. According to Kalnoochenko, the guards sheltered during the attack. Kalnoochenko said the damaged assets carried insurance coverage, but insurers do not provide protection against war-related risks in Kharkiv and nearby areas. The company is now exploring international compensation mechanisms to recover part of the losses, although Kalnoochenko did not identify specific programs. Philip Morris said it will only consider rebuilding the damaged warehouses once security conditions improve. The site sits about 40 kilometers from Russian positions, which the company said creates significant risk. The company does not plan to close or sell the facility. Despite the repeated attacks, the tobacco company continues operations in Ukraine. In 2024, Philip Morris opened a new US$30 million production facility in Lviv Oblast. Since 2022, the company has also invested $1 million in expanding logistics operations and warehouse capacity. Before operations stopped, the Kharkiv facility produced about 20 billion cigarettes annually for both domestic and export markets. The products supplied markets including Japan, Israel, Georgia, Egypt, and countries in the European Union.

• Cover