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Cargill extends spree of Black Sea port deals

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Cargill joined the list of foreign agricultural traders buying into Black Sea port facilities, acquiring a stake in a terminal at Russia's key Novorossiysk facility to secure a "vital step" in the region's supply chain.

The US-based agribusiness giant said it had purchased a stake of 25% plus one share in DeloPorts' KSK terminal at Novorossiysk, Russia's biggest port, which overall has capacity for 11.5m tonnes a year.

The KSK terminal has capacity for 3.5m tonnes a year, of which Cargill will use "a portion", with the rest available to other shippers.

The deal comes amid an investment spree by Cargill, one of the world's biggest privately held companies, which has within the last two months unveiled a £35m upgrade for its UK poultry facility in Hereford, near office, and completed the purchase from Glencore of Joe White Maltings, Australia's biggest maltster.

Investment magnet

It also represents the latest of a series of purchases by foreign groups of stakes in Black Sea port facilities, to exploit the growing export volumes expected from the likes of Russia and Ukraine, whose

Louis Dreyfus Commodities in October agreed a joint venture in Odessa to exploit "substantial growth" forecast for Ukrainian grains production and exports.

Ukraine has grown corn exports from some 5.1m tonnes in 2009-10 to a forecast 18.0m tonnes for this season, making it the third-biggest shipper, equal with Argentina, after the US and Brazil.

Swiss-based Glencore and Kernel Holding, the Ukrainian sunflowers-to-silos group, last year bought a terminal at the Russian port of Taman.

'Vital step'

Cargill said that the deal, its first in a Russian Black Sea port, would "strengthen our offering to the market, providing a channel to connect our Russian grain operations to the rest of the world".

The deal would also benefit Russian farmers, securing a "vital step in their supply chain", and so "providing them with reliable access to global markets for their crops".

Indeed, Cargill stressed its quest to expand in Russia, saying that Thursday's "strategic" deal was "in line with our intention to grow our operations" in the country, in which it has invested more than $900m since setting up there in 1991.

Cargill in September announced the start of construction work on sunflower crushing plant in Volgograd, southern Russia.


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