October 28, 2010

Cherkizovo begins pork farm construction in Lipetsk

Open joint-stock company Cherkizovo Group said it commenced construction of a new greenfield pork farm in the Lipetsk region of Central Russia.

The new multi-site complex will house 4,800 sows and will have an estimated full capacity of 12,500 tonnes of live-weight pork per year.

The complex will include separate breeding, rearing and fattening facilities, equipped with state-of-the-art technology. The farms will be populated with the company's parent stock, using sows from the high yielding and efficient pork breed, DanBred.

The launch of breeding facilities at the new Lipetsk site is scheduled for August 2011, with the rearing and fattening facilities expected to be operational from October 2011. It is expected that the new complex will operate at full capacity in 2013.

The total consideration for the planned investments is expected to be approximately US$50 million, of which approximately 20% will be funded by Cherkizovo and the remaining approximately 80% by bank loans.

Additionally, the new site will be closely located to Cherkizovo Group's existing pork production operations, and the company's fodder production plant in the Lipetsk region. This proximity is expected to contribute to substantial cost and scale synergies within the high-margin pork division.