Posco Daewoo acquires Ukraine grain export terminal

Posco Daewoo, the trading arm of steel giant Posco, has acquired a 75 percent stake in a grain export terminal held by a Ukrainian logistics firm as part of efforts to bolster its position 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 operating rights over the terminal. Orexim will keep the rest of the shares, officials said, while declining to reveal the takeover price, citing confidentiality.

A grain export terminal is a storage unit used before grain stacks are shipped for overseas delivery. Such a terminal helps traders balance business risks, as they can keep grain stacks when prices are low and ship when prices go up.

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)

The deal allows Posco Daewoo to increase efficiency in its inventory management. Apart from providing storage for grain shipments, the terminal also controls processes for purchasing and inspecting grain produced across Ukraine.

Orexim is the largest exporter of sunflower oil in Ukraine, which has one of the largest grain belts in the world. It is the fourth-largest exporter of corn and the sixth-largest exporter of wheat. Global grain traders including Cargil and Glencore are 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. Construction is expected to be completed in July.

Posco Daewoo believes the deal will contribute to Korea’s efforts to strengthen 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 over the leadership of the steel giant last year.

By Cho Chung-un (christory@heraldcorp.com)