China National Cereals, Oils and Foodstuffs Corporation (COFCO) is planning to double its grain purchases from the Black Sea countries in the next two to three years.
The region has become a major supply hub for staple crops, with Ukraine and Russia being among the world’s largest corn and wheat exporters, respectively, in the view of COFCO chairman Jingtao Chi.
In November 2018, COFCO and the Ukrainian Sea Ports Authority (USPA) signed a memorandum agreeing the development of COFCO’s 2.5 Mtpa grain terminal at the Black Sea harbour of Mykolaiv. COFCO committed to investing up to US$30M in the further development of the US$75M port terminal, as well as river logistics in Ukraine.
In March 2016, COFCO gained full control over Noble Agri (NA), its joint venture with the Hong Kong-based Noble Group, having acquired a 49% stake for US$750M. Previously, in August 2014, NA had bought Danube Shipping and Stevedoring Company (DSSC) operating at Mykolaiv.
In May 2016, DSSC launched the Mykolaiv grain terminal, including 16 silos with an aggregate capacity of 100,000t, discharge stations for 120 railcars and 120 trucks per day, a grain-dryer and a 20,000 tpd shiploader.
In addition to the port terminal, there are several food storage facilities in the country’s southern regions consolidated under the COFCO Agri Ukraine brand, which exported 1.62 Mt of corn and 514,000t of wheat in the 2016/17 marketing year.
Meanwhile, according to Rustam Temirgaliev, CEO of Russia-China Investment Fund for Regional Development (IFRD), COFCO has been considering an investment in a Russian grain terminal at Novorossiysk, Taman or Temryuk to handle 10 Mtpa, with IFRD acting as COFCO’s partner to strike a deal estimated at up to US$400M.