Current ESV Group Operations in the Ukraine
Ukraine offers a number of significant attractions:
It has the most fertile soil in Europe (referred to as “Black Soil”) and the country used to be referred to as the breadbasket of Europe.
Ukraine has significant economic competitive advantage over other producers, such as France and Germany, as the average salary in the Ukraine is about US$300 per month.
Large quantities of agricultural land are available to the Group. Rent for agricultural land is attractively priced compared to the rest of Central Europe.
The Black Sea is ideally located logistically for the transhipment of grain from as far as Kazakhstan. Large cargoes can go anywhere in the world. Smaller cargoes can be sent to the Mediterranean area.
Freight rates are cheaper when shipping out of the Black Sea to these destinations compared to shipping from countries such as France and Germany.
The main users of the grain terminal are:
- Glencore Grain BV – Holland
- Bunge SA – Switzerland
- Voest Alpine Intertrading AG – Austria
- Soufflet Negoce SA – France
- Nidera Handelscompagnie BV – Holland
Farming operation: Poltava
A purchase agreement with Agri-Ukraine, Cyprus (“Agri-Ukraine”)
has been agreed,
whereby ESV has an option to purchase the whole of the grain and
seed throughput business of Agri-Ukraine for a period of ten
years from 14 June 2006. The value of the grain and seeds
handled through the infrastructure of Agri-Ukraine is expected
to be in excess of US$4 million per annum over that period. The
Directors of ESV believe that as a result of ESV’s international
trading contacts, ESV can achieve higher prices for the grains
and seeds than Agri-Ukraine has in the past. The fee for the
purchase and resale by ESV is agreed at 10% of the turnover.
Agri-Ukraine, through its Ukrainian subsidiaries, Agrinvest Ltd
and Farmco Ltd, has planted, cultivated and sold crop locally in
Ukraine and on the export market since 1996. Agri-Ukraine has
been farming approximately 12,000 hectares of leased land in
Ukraine for eight years. Historically, crops have consisted of
sunflower seeds, wheat and maize, with barley, oil seed rape,
sugar beet and soybean as rotation crops.
Around 20 companies based in various West European countries
(including companies of Louis Dreyfus Italian spa and Glencore
Rotterdam BV) are clients of Agri-Ukraine.
Port Logistics: Kherson Sea Port
A management agreement with Dnipro Cargo Ltd, Cyprus (“Dnipro
Cargo”) has been agreed, whereby ESV has agreed to take over the management of Dnipro Cargo’s port terminal in the port of Kherson on the Black
Sea coast of Ukraine for a period of ten years from 14 June
2006. ESV will receive a management fee of 15% of the monthly
sales with a minimum payment of US$3.96 million over 10 years.
The Directors of ESV believe that the advantage of this
agreement is that ESV will benefit from a regular income stream
and that it has the capacity to increase the income stream by
virtue of longer term contracts it can bring to the port
terminal. ESV is in a key position to expand the business with
the benefit of modernisation and western expertise and
techniques.
Dnipro Cargo has owned the Kherson port terminal for over eight
years. ESV management is experienced in the marketing of grain
and port operations and has agreed to provide service to Dnipro
Cargo to manage the Kherson port terminal for a period of ten
years. ESV can develop the Kherson port terminal as it wishes
and expand the terminal activities to include non agricultural
produce such as oil and liquid gas.
The actual port facility comprises a modern equipped flat
warehouse with a central conveyor belt for sorting the goods.
The total capacity of the grain terminal is approximately
20,000MT. An additional 5,000MT capacity is located next door,
in a linked adjoining warehouse.
The main users of the grain terminal are:
Glencore Grain BV – Holland
Bunge SA – Switzerland
Voest Alpine Intertrading AG – Austria
Soufflet Negoce SA – France
Nidera Handelscompagnie BV – Holland
See also
www.agromaas.be