* Move may heighten competition with GrainCorp, Glencore
* Storage site locations to be revealed in months ahead
* No details given on funding
By Colin Packham
SYDNEY, March 18 Australian grain handler
Emerald Grain said it plans to double storage capacity to 3
million tonnes over the next three years by building new
facilities in the country's east coast and South Australia
state, a move that could intensify competition in a hot sector.
The new capacity will mean Emerald Grain, the third-largest
grain handler in Australia's east coast, may become a bigger
competitor to GrainCorp, the nation's No.1 grain
handler by volume which dominates the east coast, and Glencore
, the largest in the business in South Australia.
Australia's grain industry has recently drawn interest from
foreign firms keen to capture the benefits of the country's rich
agricultural land and close proximately to Asia.
GrainCorp last year rebuffed a $2.9 billion takeover
approach from U.S. agribusiness firm Archer Daniels Midland Co
, saying the offer undervalued it.
Privately-owned Emerald Grain did not disclose how much it
will spend on the expansion or how it will be funded. Calls to
company executives were not returned immediately.
The new capacity would allow Emerald Grain to better compete
with GrainCorp and Glencore in buying grain direct from farmers,
which can then be sold on to international customers. It can
also charge farmers fees to store their grain.
HIGHER GRAIN OUTPUT FORECAST
Danielle Buller, a spokeswoman for Emerald Grain, earlier
told Reuters the locations of the new storage sites would be
revealed over the coming months. Where the storage sites are
located will determine how effectively the company can compete,
some analysts said.
"If Emerald is going to expand its presence up-country,
where it is more competitive, it is going to marginally negative
for GrainCorp," said James Ferrier, senior analyst at Wilson
Emerald Grain's storage expansion comes amid forecasts for
strong grain production in Australia next year. The country, the
world's second-largest wheat exporter, forecast production at
24.9 million tonnes in the 2013/14 season, up 13 percent from
the 2012/13 season.
Emerald Grain currently has 14 storage sites across
Australia. GrainCorp owns 280 grain receiving sites on the east
coast, capable of accepting more than 21 million tonnes of grain
a year, while Glencore has 117 storage sites with a capacity of
more than 10 million tonnes.
(Editing by Muralikumar Anantharaman)