December 15, 2015

 

GrainCorp, Zen-Noh start grain origination joint venture in Canada

 

 

      

 

GrainCorp had announced an expansion of its grain origination footprint in Canada, through the establishment of a joint venture with Zen-Noh Grain Corporation.

 

The latter is a subsidiary of Japanese agricultural cooperative, Zen-Noh (National Federation of Agricultural Cooperative Associations).

 

GrainCorp will hold a 50% share in the joint venture, which will be based in Calgary, Canada, and plans to operate grain receiving sites across Alberta and Saskatchewan. These sites will be part of a fully integrated supply chain for the origination, marketing, storage, handling, distribution and exporting of Canadian grain and oilseed.

 

To support the start-up phase, including construction and commissioning of the sites, GrainCorp will contribute CAD30 million (US$22 million) over the next two years, while the joint venture will source additional funding of CAD60 million (US$44 million) from financial institutions. GrainCorp's contribution will be made from existing cash and debt facilities.

 

Construction is expected to be staged progressively from the second half of FY16 through to the end of FY18.

 

The expansion was in line with the growth strategy outlined at GrainCorp's Investor Day in May, said Mark Palmquist, the managing director and CEO of Graincorp.

 

"This is an exciting opportunity to partner with one of the world's most respected agricultural organisations and deepen our relationships with our international customers by growing our grain origination capability," Palmquist commented. "The joint venture will leverage GrainCorp's existing Canadian footprint, including our Calgary Marketing office and Canadian Malting Company operations; plus Zen-Noh Group's significant experience and customer relationships in exporting agricultural commodities from North America to Japan and other Asian destinations."

 

Palmquist noted that a key part of GrainCorp's value proposition for international customers is to have a multi- origin offering, in order to meet a broader range of requirements.

 

"This gives us greater relevance and a broader platform to engage with the customer, creating more opportunities to offer our services," he added. "The new business also benefits grain and oilseed growers in the Canadian Prairies, by providing an independent and alternative pathway to market."

 

"We are pleased to be involved in this project with GrainCorp. This is a good opportunity to grow our business in Canada with a trusted partner," said John Williams, the president and CEO of Zen-Noh Grain Corporation. "It allows us to strengthen further our ability to supply our customers in Japan and Asia, and we look forward to a bright future for the joint venture."

 

GrainCorp Marketing's existing office will support the joint venture to manage the origination process with Canadian grain growers.

 

Discussions have commenced concerning rail and port access for the joint venture.