Russia: Glencore purchases elevators in Russia
Newspaper Business, circulating in Russia and several other ex-Soviet countries, wrote that according to its information, International Grain Company (IGC), which is Russian affiliate of renowned Glencore, was currently processing a purchase of four grain elevators in the south of Russia, the APK-Inform Information Agency communicated on September 29. According to Business, if the deal has been finalised IGC will rank within Russia's top companies operating grain storage facilities.
Business said it got to know about the deal that was on the final stage of negotiations from several well-informed sources close to the negotiating parties. According to them, IGC is buying Peschanokopsky Bread Products Plant in Stavropol Krai, Gulkevichsky (Gulkevichi) Bread Products Plant in Krasnodar Krai, Dvoinyansky (Dvoinya) Elevator in Rostov Oblast and another grain elevator whose name they fail to know. It is known, however, that the last three facilities are controlled by company OGO through the holding "Russkie Masla" and the first one so far belongs to holding "Stoylenskaya Niva". A spokesman for OGO confirmed that Russkie Masla were negotiating sale of the Gulkevichi and Dvoinya facilities with IGC. Russkie Masla was said to have refused from either confirmations or denials; Stoylenskaya Niva was said not to have been available for comments. Also, the star actor - IGC - refused to give any comments on the deal as well.
Out of the experts, interrogated by Business, Yuri Artiomenko, Grain Division Manager of Razguliay-Ukrros said he estimated the deal to be worth some $20 million. Vitaly Bobnev, however, of Silverstone trading company said it may have cost no more that $7.5 million.
Russia's grain market insiders, on the whole, were praising the IGC's actions, saying the company was moving "in right direction".
"When they were entering Russian market (in spring 2004 - Business), Glencore was claiming its intent to invest some $100 million in Russia. Now this programme seems to be coming into life", said Russian Director of WJ trading company Alexander Kondrashov. Grain business in Russia may bring nice profits if it comes to be correctly organised, he added.
"The elevators are located in the port neighbourhood, and may help IGC reduce its overheads. The more elevators an exporter has, the larger control it gets over the process of grain exports", said analyst from IKAR Igor Pavensky.
"From this time on IGC will have its own accumulation capacities, which will allow it smoothly dispatching the grain to the port elevators, which are capable of storing much smaller volumes", said Yuri Artiomenko of Razguliay.
Vitally Bobnev of Silverstone assesses combined capacity of the three elevators, whose names are known, in about 350,000 tonnes of one-time storage. "But these assets are located next to the facilities of Yugtranzitservis. IGC will have to face a stiff competition with this company", he warns.
According to market participants, combined capacities of Russian grain elevators at the moment are rising to some 100 million tonnes. The largest players on Russian grain storage market are the companies Razguliay, Ruselko, Nastiusha and OGO. But the majority of market so far belongs to small independent operators. Nonetheless, the experts forecast the process of elevator capacities consolidation to continue and expand further on.
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