renowned for bargain wheat prices, is to get a further competitive edge through
upgrades to the port of Taman, Glencore said, as it added a grain terminal at
the site to its acquisition list.
Glencore – which
this week saw a breakthrough in its $33bn quest to purchase Xstrata – teamed
up with Ukraine's Kernel Holding to pay $265m for a grain export terminal at
Taman, a deep sea Black Sea port which is at the centre of a development drive.
terminal, purchased from Efko, a vegetable oil group, was the first for grains
at Taman, which is noted among Russia's Black Sea ports for being ice-free in
winter, unlike sites in the nearby Azov sea, where ships were frozen in last
winter, disrupting exports.
"will enable Russian grain to be exported throughout the year",
Glencore said, a factor which will in turn "increase the competitiveness
of Russian grain on the world market".
Russian wheat is
already renowned for competitive prices, although a drought-hit harvest this
year has limited the country's exportable surplus.
Taman is being
upgraded not only through a grain terminal, but also with rail access, over
which authorities in the local Krasnodar district – a major source of Russian
grain for export – and the country's ministry of transport signed an investment
agreement a year ago.
The facility sold
by Efko is currently the major truck hub for grains on Russia's Black Sea.
The site, which can
accommodate panamax vessels, also has potential for an extra 2m tonnes of grain
a year, at a cost of some $60m-80m, with Russia's United Grain Company also
having expressed an interest in investing in Taman.
The extra volumes
will help Russia cope with demand which its existing ports, even its giant
Novorossiysk site, are struggling to cope with.
For wheat, even
after a poor harvest, the spate of orders from the likes of Egypt and Iraq has
left Russia's exports looking "logistically very tight", analysis
group Fryer noted.
Meanwhile, a range
of international crop traders, besides Russia's own Summa group, are scrambling
to gain share of a grain export market which, despite hiccups in 2010 and this
year, is expected to become increasingly important as investment in
infrastructure and agriculture bears fruit.
grain exports are "expected to be around 51m tonnes a year by 2021",
on production expected to grow by 35%, or 34m tonnes, "within a
decade", Kernel said on Tuesday.
International has been notable this year for its increased aggressiveness in
Glencore, which is
already a large player in Russian grain exports, said that the purchase of the
Taman facility would enable it "to further meet the needs of its
customers" in Europe, the Middle East and Africa.
Kernel - which has
long coveted expansion into Russia, and bought a sunflower seed crushing operation there last year - said that the terminal "will serve as a
platform for the large-scale deployment of Kernel's grain export business from
Kernel is already a
major exporter of grain from Ukraine, where it also boasts farming, elevator
and vegetable oil operations.
which are listed in Warsaw, closed 3.2% higher at 67.15 zloty.
In London, Glencore
stock ended 1.2% lower at 338p.