Canada’s biggest grain handler plans to put up as much as US$25 million toward construction of a joint-venture canola crushing plant in a southern Chinese port city.
Viterra said Tuesday it will partner with Guangxi Beibu Gulf International Port Group, the state-owned port authority for Guangxi province, to build the new facility at the port of Fangchenggang, about 145 km south of the provincial capital, Nanning.
The Regina-based grain handler said the new plant is expected to crush 2,000 tonnes of canola per day, or about 680,000 tonnes per year.
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Construction is to begin in May and is expected to be complete in about 18 months, Viterra said.
The two companies’ joint venture, to be called Fangchenggang Maple Grain and Oil Industrial Co. Ltd., “further extends and diversifies (Viterra’s) capabilities in processing in a region that is experiencing significant demand for canola oil and canola meal-based proteins.”
That said, Canadian canola exports to China have stalled in recent months under China’s new restrictions on blackleg-infected canola seed.
Federal Agriculture Minister Gerry Ritz, who last week wrapped up an ag trade mission to China, was quoted as saying it will still take more “time and hard work” to resolve the blackleg issue.
But in the company’s release Tuesday, Viterra CEO Mayo Schmidt noted “the considerable effort that Canada’s federal government has made in maintaining and enhancing relationships in the regions to support continued demand for Canadian grains and oilseeds.”
Schmidt said he’s “confident that the work currently underway between our respective governments and the industry will help ensure Canadian canola seed exports remain strong into China into the future.”
“Our government knows that China represents a world of market opportunities for Canadian farmers,” Ritz said in a separate statement Tuesday, “and this kind of investment by Viterra will help give China the capacity to crush more canola, which will strengthen the bottom line of Canadian canola producers.”
The joint canola crushing venture “fits well with our overall strategy to expand our processing value chain into key end-use markets such as China, where… we have established long-lasting sales and marketing relationships and where the future demand for quality food ingredients is forecast to rise substantially,” Schmidt added.
Schmidt also cited the Guangxi Beibu port group’s “significant relationships and experience in the region” as a valuable asset for the joint venture.
The port group oversees operation of Guangxi’s three coastal ports at Fangcheng, Qinzhou, and Beihai, together handling over US$5.5 billion in trade per year. The ports include 50 production berths in all, with combined handling capacity for about 100 million tonnes of cargo.
Viterra noted the Guangxi ports are now in the midst of a “rapid expansion plan” to add another 200 million tonnes of capacity by 2015.
