Posco Daewoo Corp. has bought a grain export terminal in Ukraine to become the first Korean entity to own the operating rights to a grain storage facility overseas.
The trading arm of steelmaking conglomerate Posco said Wednesday it signed an agreement with Ukrainian logistics firm Orexim Group to acquire a 75 percent stake in its grain export terminal. The financial terms of the deal were not disclosed.
The terminal is to be located in the southern city of Mykolaiv, Ukraine’s key transportation hub and home to one of the largest ports in the Black Sea. When completed in July, it is expected to have a capacity of 2.5 million tons a year, handling mostly corn, wheat and soybeans.
A grain export terminal is a storage space for grains before loading them onto ships for export. With the latest deal, Posco Daewoo said it would be able to oversee the entire supply chain of grain produced in Ukraine and manage a more efficient inventory.
Orexim Group not only owns and operates grain terminals but has two unloading service operators and two logistics firms under its wing. It is also Ukraine’s largest exporter of sunflower oil.
Ukraine is a major agricultural producer, ranking fourth and sixth in worldwide shipments of corn and wheat, respectively. Its grain exports are expected to grow to 75 million tons by 2027. The country’s vast agricultural sector has drawn many commodity trading players including the U.S. agribusiness firm Cargill and Switzerland-based Glencore.
Posco Daewoo said the deal would also help contribute to Korea’s food security. The country’s grain supply relies heavily on exports, with its self-sufficiency of corn and wheat in the 1 percent range. In 2017 alone, it imported 10 million tons of corn and 5 million tons of wheat.