WA link to port expansion
WA growers are set to reap the benefits of a new $US55 million port and grain handling facility, opened with great fanfare in Vietnam last week.
The opening of the Interflour Vietnam Cai Mep Agri Port, which is located 100km south-east of Ho Chi Minh City, was attended by 700 guests from all sectors of the grain, shipping and milling industries from 25 countries.
It is one of South-East Asia’s biggest special-purpose grain ports, catering for Panamax-class (75,000-tonne) vessels, with an unloading capacity of 18,000 tonnes per day.
The port and adjacent flour mill are operated by Interflour Vietnam, which is 20 per cent owned by Japanese company Sojitz Corporation and 80 per cent by Interflour Holdings — a 50:50 partnership between CBH and the Salim Group.
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Interflour chief executive Greg Harvey said the port would handle two million tonnes of grain and grain-related products annually in its first five years of operation.
It will only handle food/feed-related cargoes, not other products, and will be open to any companies wishing to import or export grain products, not just to import wheat for Interflour Vietnam’s flour mill.
Mr Harvey said it would primarily import soybean meal for use in the feed and aquaculture feed industries, a sector that was growing rapidly in Vietnam.
By volume, the second biggest commodity through the port would be wheat, not only for Interflour Vietnam’s mills, but for other local flour mills. Corn would account for the third biggest volume handled through the port.
Interflour Vietnam will also use the port to export its flour to neighbouring countries such as Cambodia, Laos and Thailand.
The port terminal includes an extra 130,000 tonnes of storage, made up of a 100,000-tonne, 10-bay warehouse and silos that have a combined storage capacity of 30,000 tonnes.
As part of the new port opening, there was a groundbreaking ceremony to kick off Interflour Vietnam’s plans to double the capacity of the existing flour mill to make it the biggest mill in Vietnam.
Interflour Vietnam chief executive Shuchi Sato said the $US24 million flour mill expansion would double milling capacity from the current 500 tonnes of flour a day to 1000 tonnes per day.
The mill expansion, due to come on line by March 2012, is needed to meet rising demand, as Vietnamese consumers embrace a more western diet and new markets for flour emerge in neighbouring countries.
Mr Sato said the mill had been operating at maximum capacity of just under 11,000 tonnes of flour sales a month for the past 18 months, up from 3000 tonnes a month five years ago.
“There has been good market growth in Vietnam, but most of our increase in flour sales has come from taking market share from competitors, ” Mr Harvey said.
“We have really focused on the bread flour markets. And we have also developed a regional export business into Singapore, Thailand, Taiwan, Hong Kong, Cambodia and Laos.
“We are at the stage where about 20 per cent of our (Interflour Vietnam) total flour sales every month are going into regional export markets.”
CBH chairman Neil Wandel said the opening of the Interflour Vietnam grain port terminal and the start of the flour mill expansion were important financial and symbolic milestones in the history of Interflour and its close relationship with WA growers.
He noted that so far most of Interflour’s profits had been reinvested into expanding the business, including the growth in Vietnam, but this was about to change.
Returns from Interflour in the coming year would certainly help CBH’s drought-affected bottom line. CBH has already received a dividend payment from Interflour and the outlook was promising.
“This is particularly timely — helping to balance the inevitable negative impact on CBH’s financial performance of the drought we are now enduring in WA, ” Mr Wandel said.
“In the past financial year, $8.5 million has flowed back to the CBH Group from Interflour Holdings to repay debt and interest for the past financial year.
“For the current financial year, indicative payments have been set which will see shareholders CBH and Salim receive 20 per cent of net profits after tax from Interflour Holdings, of which half, or 10 per cent, will go to CBH.”
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