Canada’s largest grain company has finally become a major player in the oilseed processing business.
Viterra has announced it will buy the largest oilseed crush facility in Eastern Canada for $190 million.
The facility in Becancour, Que., is owned by a Malaysian company, Twin Rivers Technologies Holdings Entreprises De Transformaiton De Graines Oleagineuses Du Quebec Inc.
The swing plant, which can process either soybeans or canola, was commissioned in 2010 and located on the St. Lawrence Seaway between Montreal and Quebec City. It has the capacity to process 1.05 million tonnes of oilseeds per year.
Viterra president Kyle Jeworski said the facility extends Viterra’s reach.
“It really expands our presence in Eastern Canada,” he said.
The company’s only other eastern assets are an export terminal and sales office in Montreal and two port terminals in Thunder Bay.
The sale also bolsters the company’s oilseed processing business, which up until now consisted of a specialty canola oil facility in Ste. Agathe, Man., which has the capacity to crush 350,000 tonnes of canola per year. It produces non-genetically modified expeller-pressed oil.
Competitors such as Bunge, Archer Daniels Midland, Cargill, Richardson International and Louis Dreyfus all own sizeable plants in Manitoba, Saskatchewan and Alberta.
“It’s a very crowded marketplace in Western Canada. That’s one of the appeals of the plant in Quebec,” said Jeworski.
“We think it’s a very nice strategic fit rather than potentially putting another asset on top of a very, very competitive and one could argue overbuilt situation in Western Canada.”
The plant is located close to markets for meal and oil in Eastern Canada and northeastern United States.
However, it is long way from where the canola is grown in Manitoba and Saskatchewan.
Some analysts feel that was the downfall of Legumex Walker’s crush facility in Warden, Washington, which is currently for sale.
Jeworski said that is comparing apples to oranges. Viterra’s new facility is a swing facility that is located near a lot of soybean production in Ontario and Quebec.
Soybeans typically account for half of the plant’s crop volumes. They will also be bought from Ohio and Michigan as well as Saskatchewan and Manitoba as acreage increases in those two provinces.
He said the plant also has more logistical flexibility than the Legumex Walker plant because it can ship and receive product by truck, rail and ocean vessel.
That means Viterra can bring in product from its port terminal in Montreal and its two port terminals in Thunder Bay as well as by rail and road.
Jeworski said origination is not going to be a problem and in fact will be the reason the plant will be more efficient. It has been operating “significantly below capacity.”
“As long as the economics justify we will look to operate the plant at full capacity,” he said.
“I don’t think there is any hard and fast rule for us of what we’re going to crush. It’s going to be the market conditions that really dictate that.”
Viterra has no immediate plans to further expand its oilseed processing business. The near-term focus will be fully integrating the Quebec facility into its operations once regulators approve the sale.
That doesn’t mean the company is done adding processing capacity.
“Things like crushing make sense to us, so I would never rule out opportunities in the future to expand our presence on the crushing side,” said Jeworski.