LONDON Glencore (GLEN.L), the commodities trader in the throes of a $33 billion takeover of miner Xstrata XTA.L, has bought a 50 percent stake in a Russian grain export terminal, alongside Ukrainian agricultural producer Kernel KER.WA.
The terminal in the port of Taman, one of the largest deep- water grain export terminals on the Black Sea coast, is close to southern Russia's main grain producing region, providing a platform for Kernel's Russian export business and extending Glencore's reach.
Glencore, the world's largest diversified commodities trader, is already one of the largest exporters of grains from Europe and the former Soviet Union.
Kernel said the terminal, with an installed capacity of 3 million metric tonnes (3.3 million tons) a year and sold by EFKO Group, had an enterprise value of $265 million. EFKO, a Russian food producer, was reported prior to the deal to have estimated the value of the assets at $200 million to $300 million.
Wheat output from the Black Sea-region producing countries - Russia, Ukraine and Kazakhstan, which normally supply a quarter of world wheat export volumes - is expected to drop this year because of drought.
In particular Russia, historically number the world's three global wheat exporter by volume, is expected to decrease its 2012/13 grain harvest by a quarter to 70 million tonnes.
But Russia, with the world's fourth-largest expanse of arable land and huge potential for modernization in the agriculture sector, is trying to position itself in the longer term to increase grain exports by half and grab a bigger share of growing world food demand.
President Vladimir Putin wants to see annual Russian grain exports rise to 35 million-40 million tonnes by 2020, up from last year's 27 million tonnes. To achieve those targets, it will need billions of dollars of investment in infrastructure.
Glencore has spent the last eight months pursuing a combination with Xstrata to create a mining and commodities powerhouse.