U.S.-based Archer Daniels Midland announced May 26 that it had entered into a 50/50 joint venture with a grain-trading firm to complete and jointly operate a sun oil production facility in Ukraine, one of the world’s largest sun seed producers.
In a statement, ADM identified its partner as Risoil S.A., which operates a vegetable oil export facility at Ilichivsk Sea Port, situated on the Black Sea near Odessa. The companies will jointly manage the plant, called Ilichivsky Maslo Extractyny Zavod. Construction of the facility, which commenced in April 2003, is expected be completed by this November.
Ukraine’s Anti-Monopoly Committee gave permission for ADM subsidiary Archer Daniels Midland Nederland B.V. to acquire a 50 percent share in the plant this April.
ADM President Paul Mulhollem described the investment as a “natural extension” of his company’s existing operations in Ukraine.
“Through our majority ownership of [grain trading firm] Alfred C. Toepfer International, we operate an active and growing network of grain and oilseed origination facilities, as well as investments in export elevators and transportation assets within the Ukraine,” he added.
Bjorn Stendel, managing director of Toepfer Ukraine, said the plant will have the capacity to crush 170,000 tons of sun seed or soya beans a year, but capacity could be increased further. Neither ADM nor Stendel revealed the cost of the new plant.
Headquartered in Decatur, Illinois, ADM is one of the world’s largest agricultural processing firms. The company, which posted net sales exceeding $30 billion last fiscal year, employs more than 26,000 employees at more than 270 processing plants.
ADM is the third major agro-company to build a sun oil plant in Ukraine, which harvested just over 4 million tons of sun seed last year, enough to account for about 10 percent of global production.
ADM’s announcement comes less than two weeks after U.S.-based Bunge, the global leader in oilseed processing, announced plans to build an export-oriented $70 million sun oil plant in Ilichivsk by 2005.
Bunge entered Ukraine in 2002, when it acquired French food-processing company Cereol, owner of Dnipropetrovsk Oil Extraction Plant, whose sun oil is sold in the CIS under the Oleina brand.
Cargill, which is also headquartered in the U.S., pumped $50 million into a sun oil plant located in Donetsk oblast in 2000.
Bunge’s new facility will have a capacity of 600,000 tons a year; Cargill’s Donetsk facility has an annual capacity of 300,000 tons.
Cargill’s facility and the new ADM and Bunge plants will, when completed, control about a third of Ukraine’s sun seed business, which crushes about 3.4 million tons of seed annually.
Stendel said a lot of smaller processors, mostly Ukrainian-owned, remain on the market.
“It’s a very competitive market,” he added.
