The trading arm of South Korean steel giant Posco has acquired 75 percent of shares in a grain export terminal held by a Ukrainian logistics firm as part of its effort to bolster its strength as a global grain trader, the company said Wednesday.
Posco Daewoo has signed a contract with Orexim Group, a logistics firm in Ukraine, entitling the Korean firm to hold the operating rights of the terminal. Orexim will keep the rest of the shares, officials said, while declining to reveal the takeover price, citing confidentiality.
|Posco Daewoo President Kim Young-sang (right) and Yuri Budnyk, chairman of Orexim Group, pose after signing a share sale and purchase agreement in Ukraine on Tuesday. (Posco Daewoo)|
A grain export terminal is a storage unit used before having grain stacks shipped for overseas delivery. Such a terminal helps traders balance business risks as it can keep grain stacks when the price is low and ship when prices go up.
The deal allows Posco Daewoo to increase efficiency in its inventory management. Not only working as storage for grain shipments, the terminal controls processes for purchasing and inspecting grain produced across Ukraine.
Orexim is the largest exporter of sunflower oil in Ukraine. The European country has one of the largest grain belts in the world. It is the fourth largest exporter of corn and sixth of wheat. Global grain traders including Cargil and Glencore have been increasingly making inroads into Ukraine, the company said.
The export terminal acquired by Posco Daewoo, located in southern Ukraine, will be capable of shipping 2.5 million tons of grain a year. The construction of the terminal is expected to be completed in July.
Posco Daewoo believes the deal will contribute in Korea’s efforts for strengthening food security. Asia’s fourth-largest economy heavily depends on imports for the nation’s grain supply. As of 2017, the country brought in 10 million tons of corn and 5 million tons of wheat.
Posco aims to become a global grain trader as part of its new growth strategies set by Chairman Choi Jeong-woo who took the leadership of the steel giant last year.
By Cho Chung-un (firstname.lastname@example.org)