The State Food and Grain Corporation of Ukraine (SFGCU) and the Chinese company CCEC are exploring the possibility of implementing joint projects involving modernization of elevators and construction of a new deep-water port terminal. According to preliminary estimates, the total amount of planned investment could reach USD 500 million, the SFGCU announced.
In particular, USD 25 million is expected to be invested in modernization of the Odesa grain terminal, which will increase its capacity and reduce the cost of loading ships. After the modernization, the State Food and Grain Corporation will be able to receive Panamax-class ships and stop loading vessels on the roads, which will reduce the cost of freight. In addition, the operational capacity of the terminal will increase to 120,000 tons, which will allow accumulation of consignments for approximately two ships.
According to the State Food and Grain Corporation’s acting Board Chairman Oleksandr Hryhorovych, USD 130 million is expected to be spent on reconstruction of linear elevators and mills, which will reduce production costs by more than 35%. New silos with a total capacity of 150,000 tons are also expected to be built in the Kyiv and Vinnytsia regions.
The State Food and Grain Corporation’s investment plan envisages creation of additional capacity for transshipment of grain through construction of a new deepwater port silo and reconstruction of the existing berths. About USD 135 million is expected to be spent on implementation of this project. When it is completed, the State Food and Grain Corporation will have a modern marine terminal capable of unloading vessels with up to 100,000 deadweight tons and an operational capacity of 300,000 tons. This will increase the State Food and Grain Corporation’s total capacity for shipping grain by water to 5 million tons per year.
According to the head of the State Food and Grain Corporation, the modernization and construction projects are expected to be implemented by the year 2020. Representatives of the Chinese side will be involved in the working process and all the company’s resources will be mobilized, Hryhorovych said.
According to CFTS Consulting, the State Food and Grain Corporation currently handles grain with equipment that is physically and morally obsolete. "The State Food and Grain Corporation inherited elevators and terminals that have been in operation since the Soviet Union era. The facilities are quite outdated, major upgrade or repairs were not performed. Port terminals significantly lag behind their modern analogues in terms of loading intensity, which increases the cost of freight," said Andrei Isayev, a consultant with CFTS Consulting.
As reported, the State Food and Grain Corporation was established by the Ukrainian government in August 2010. It has an extensive network of branches – linear and port elevators, mills, and feed and cereal plants. Collectively, the 53 branches of the State Food and Grain Corporation can store 3.75 million tons of grain. These include the Odesa and Mykolaiv seaports, which have a combined capacity to handle about 2.5 million tons of export grain cargoes per year.
The State Food and Grain Corporation reached an agreement with the Export-Import Bank of China for a loan of USD 1.5 billion in 2012. The loan was intended for purchase of grain for subsequent export under trade agreements with China. On the Chinese side, this 15-year contract was signed by CCEC. China was expected to provide an additional USD 1.5 billion for projects involving irrigation and development of grain logistics.