Cargill to build Russian oil plant

- Last updated on GMT

Related tags: Cooking oil, Vegetable fats and oils, Petroleum

Cargill is adding to its growing investment portfolio in Russia
with the announcement that it is to build an edible oil extraction
plant in the Voronezh region, according to regional director Semyon
Khariton.

In a report carried by Interfax, the company said that it will begin construction of the plant at the end of April. Construction was due to begin in the autumn of 2003 but was delayed due to problems locating an adequate building site for the plant.

The agreement to build the plant in the Voronezh region was originally made with the local authorities at the beginning of last year. The deal sealed a mutual co-operation plan to build a large scale sunflower seed processing plant, with an estimated project value of up to €100 million.

The US-owned Cargill group has been present in both the Russian agricultural and processed foods sectors since 1991, when it first opened up a representative office in Moscow. Since then it has built up its Grain and Oilseed Supply Chain Europe business unit as well developing Cargill Starches and Sweeteners Russia, which operates a corn milling plant in Efremov, near Tula.

Adding to the $50 million that the company has already invested in the Efrermoy plant, the company recently announced a further investment of $50 million to construct a malt milling facility, also in the Tulsa region. The company has budgeted to spend up to $200 million in Russia during the course of the next two years.

In recent months there have been a number of significant investments in the field of edible oil production. At the beginning of the year, Finnish food and chemicals group Raisio announced that it was about to transfer production of its edible oils production facility from Sweden to Russia. And just a couple of weeks ago, leading sauce maker Baltimore said that is was investing €16 million in two major vegetable oil production facilities.

Just this week the Uryupinsk Oil-Extraction Plant, based in the Volgograd region, inaugurated a new production line for refined and deodorised sunflower oil at a cost of R130 million (€3.75m). The line is reported to have a production capacity of 200 tons an hour and has been kitted out by Swedish equipment provider DeLaval.

The edible oil industry is continuing to grow against a backdrop of sustained demand for processed foods in the country. In 2003 the market for edible oils in Russia was the fifth largest food commodity import for the country, reflecting a high degree of reliance on suppliers from outside the country. Increasing moves to invest in domestic edible oil production facilities are seen as a way of both reducing the cost of importing and limiting reliance on world supplies, which are often erratic.

Related topics: Market Trends

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