In another sign of the readiness of Chinese companies to invest into Russian agriculture, trading corporation COFCO is interested in acquiring a 25% stake in Russian grain terminal KSK in Novorossiysk, Kommersant reported citing sources close to the deal.
Тhe third largest grain terminal in the southern Chernomorsk region of Russia is currently controlled by Delo Group, a holding owned by Russian billionaire Sergey Shishkarev. DeloPorts, a subsidiary handling the terminal, has confirmed negotiations have begun without disclosing details, the business newspaper wrote.
Agriculture has been a key strategic sector for the Kremlin, which has poured money into developing the sector and seen grain production and exports soar as a result.
Russia is earning over $20 billion a year from grain exports in recent years – the second biggest export product after raw materials. The country has been the world’s largest grain exporter for the last few years and is on course to retain the title, although this year it is competing with Ukraine for the title.
The possible deal with COFCO adds to several other pointing to a possible expansion of Chinese investment in Russian agro sector. The KSK terminal handled 4.8 million tons on grain exports, 25% plus one share in the terminal is controlled by Cargill, which is reportedly not participating in the COFCO deal.
Russia has been eyeing the Chinese market and sees exports of agricultural products to China – especially over the Far Eastern border to China’s north-western provinces – as a key market for development and potentially a major money-maker.
In 2015-2016 COFCO acquired trading companies Noble Agri and Nidera that also operate in Russia. In the 2018 season, the Chinese corporation was the 16th largest grain exporter from the country.