Viterra to acquire five sites in Australia from Cargill

Viterra has reached an agreement to acquire five storage and handling sites as well as a mobile ship loader in South Australia and western Victoria from Cargill. The acquisition is expected to “deliver efficiencies for the South Australian and western Victorian supply chain and bring tremendous opportunities for growers, buyers and the industry,” Viterra said.

Financial terms of the transaction were not disclosed. The deal remains subject to approval by the Australian Competition and Consumer Commission and the Foreign Investment Review Board.

Viterra said the five Cargill GrainFlow sites to be acquired are located at Maitland, Crystal Brook, Mallala, Pinnaroo and Dimboola. The mobile ship loader is located at Port Adelaide.

“By using the sites’ high-speed rail and truck loading facilities to complement our existing network, we will bring more tonnes to port through the most efficient and cost-effective route,” said Philip Hughes, chief executive officer of Viterra, Australia and New Zealand (ANZ). “This increase in supply chain velocity will enable us to meet the rising demand for high quality local grain in the first half of the year, assisting growers to achieve a premium for their grain by exporting more tonnes earlier in the season.

“Growers will also see a direct benefit with reduced freight rates due to the efficiencies we will gain.”

Viterra said it expects the addition of the sites to result in a 15% reduction in freight rates at Mallala, Crystal Brook and Pinnaroo. Meanwhile, a 25% reduction in freight rates is expected at Dimboola and Maitland.

“We will be investing approximately A$25 million into these sites in the first two years and will continue investing A$8 million annually to support efficient outturns and improve delivery times and the grower experience more broadly where required,” Hughes said. “This is in addition to the A$75 million we currently invest in our network each year.”

Hughes also said the acquisition is part of Viterra’s broader plan to make the South Australian grain supply chain more efficient to better compete with interstate and international origins of the Black Sea, Canada, United States and South America.

“This will further enhance the level of service for buyers accessing the South Australian grain supply chain, which supports Viterra’s focus of increasing competition for South Australian and western Victorian growers’ grain,” he said. “In the past five years the number of exporters purchasing from our network has doubled, with 24 exporters using Viterra’s network, which has directly benefited growers. We look forward to growing our relationship with Cargill, who will continue to be one of the 24 exporters purchasing grain through the Viterra network and seeing them increase their volumes as a key exporter from South Australia.”

For Cargill, the transaction is an opportunity to grow its business in South Australia, said Zsolt Kocza, managing director for Cargill Australia.

“We have a long-term access agreement to Viterra’s export supply chain, supporting our long-term growth plans,” Kocza said. “In the next few years, we intend to double our export volumes and become one of the largest exporters from the state. This means buying more grain from growers to the benefit of growers and the industry overall. We are excited to build on this growth in the future and continue demonstrating our commitment to the Australian grains industry.”

Tags: Australia, Cargill, Viterra