April 16, 2009
Hyundai Heavy to buy large stake in Russian farming firm
South Korea's Hyundai Heavy, the world's top shipbuilder, had agreed to buy a 67.6 percent stake in a Russia-based farming company to grow grains for the import-dependent North Asian country.
Hyundai will buy the stake in Khorol Zerno LLC, an agricultural management company, for US$6.5 million and plans to invest an additional US$9 million to expand its farmland to 50,000 hectares by 2012 from the current 10,000 hectares.
Hyundai plan to grow 60,000 tonnes of corn and soy annually by 2014 on the farm in the Khorolsky Rion region, near Vladivostok, which would allow the firm to use port infrastructure for exports to South Korea and other countries.
The company's aim is to curb sudden food price changes in South Korea and supply shortages of provender, said Hyundai, adding that the deal was part of its strategy to diversify its business into food and renewable energy.
The move comes as South Korea endorses overseas farming to boost domestic food security, but recent attempts by the country have not been all successful.
South Korean trading firm Daewoo Logistics' plans to leasing over one million hectares of land in Madagascar to grow corn has been pulled off the plug after the country's new leader cancelled the deal last month.
Last year, South Korea imported 8.7 million tonnes of corn, mainly for animal feed production.
