Canada’s largest grain handling company enters 2013 with new Swiss owners, but the Viterra logos on country elevators won’t likely be coming down for a while yet.
Officials with Glencore International are saying little about what changes, if any, will be implemented at country elevators that were formerly owned and operated by Viterra.
Instead, executives with the Swiss company will familiarize themselves with their new assets, consult with senior managers at Viterra and focus their efforts on addressing immediate issues related to staffing, administrative functions and the pending sale of assets to Richardson and Agrium.
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After a lengthy regulatory review process, Glencore announced Dec. 17 that it had completed the acquisition of the Regina-based grain company, whose Canadian assets included 258 retail crop input facilities, seven port terminals and 92 primary grain elevators, including 49 in Saskatchewan, 25 in Alberta and 16 in Manitoba.
However, it remains to be seen how country operations will be affected.
The $6.1 billion acquisition also included former Viterra assets in the United States, Europe, Asia and Australia.
Australian assets included more than 100 bulk grain receival sites, primarily in South Australia, eight export terminals on the country’s south coast and a handful of malt processing operations.
Glencore officials declined to be interviewed, but the company said in a Dec. 17 news release that the acquisition of Viterra gives Glencore “immediate critical mass” in North American grain markets and a greater presence in Australia, where it was already one of that country’s largest grain buyers.
“The acquisition reinforces Glencore’s position as one of the world’s leading commodity suppliers,” the news release said.
“By combining Viterra’s first class assets, grain logistics and processing insight with our global marketing capability, we have the opportunity to become a true leader across the sector with even greater means to meet the needs of farmers and customers globally,” added Chris Mahoney, Glencore’s director of agricultural products.
The company said deals to sell selected Canadian and Australian assets to Agrium and Richardson International will be completed before the end of 2013.
Until then, the company will continue to “support” assets that are slated for sale.
Richardson, Canada’s second largest grain handling company, has an agreement with Glencore to acquire 19 western Canadian elevators that were formerly owned by Viterra, as well as:
• A 25 percent ownership stake in the Cascadia Terminal in Vancouver.
• Full ownership of a Viterra grain terminal in Thunder Bay, Ont.
• Can-Oat Milling facilities in Saskatchewan, Alberta and Manitoba.
• Full ownership of 21st Century Grain Processing, which has oat and wheat milling facilities in Nebraska and Texas.
Agrium, meanwhile, is expected to acquire 232 Viterra farm retail outlets in Canada and a handful of farm retail outlets in Australia.
Both of those deals will require government approval.
Glencore also confirmed that Fran Malecha, former chief operating officer with Viterra, has been appointed as the company’s director of agricultural products for North America.
“I am excited to be staying on to lead Glencore’s North American agricultural business, and look forward to strengthening our relationships with farmers,” Malecha said in a prepared statement.
Other than that, few details are available.
Holly Gibney, media contact for Viterra, said it could be some time before additional details of the Glencore move are made public.
“I’m not too sure that they’ve provided much beyond the divestitures (to Agrium and Richardson) and the fact that the Calgary office will close,” Gibney said before Christmas.
“They haven’t provided many specifics and, as you can imagine, it’s the early days right now so I don’t have much more that I can offer.… A lot of people have been waiting for this day to happen and just now, once we get across the line on a transaction like this, that’s when Glencore can start working with our executives to start making those decisions.”
Glencore indicated when it announced plans in early 2012 to acquire Viterra that some Viterra employees based in Calgary would be relocated to Regina.
Twenty to 30 senior management positions are expected to be relocated to Regina from Viterra’s offices in Calgary.
In addition, 30 to 40 percent of Viterra’s 485 head office employees in Regina could be affected by the sale of assets to Richardson and Agrium.
Most of Viterra’s former country workers, including 1,600 in Saskatchewan, are expected to retain their jobs, according to a review of the takeover that was commissioned by the Saskatchewan government and conducted by Informa Economics.
Glencore officials also assured government officials that it would:
• Maintain a head office in Regina and make it the headquarters for Glencore’s North American operations.
• Increase Viterra’s projected capital expenditures in Canada by more than $100 million over five years.
• Invest an additional $8 million in research and development initiatives, over and above Viterra’s projected expenditures.
• Contribute to unspecified grain industry initiatives in Manitoba.
• Increase contributions by 25 percent toward programs that support the western Canadian farm community.
• Make charitable contributions in support of youth and to provide scholarships to First Nations and Métis students.
• Work with the government of Saskatchewan toward the development of a Global Institute for Food Security and contribute to the project should the province initiate it.
Richardson would acquire five primary elevators in Alberta, 10 in Saskatchewan, two in Manitoba and two in British Columbia if its deal to buy former Viterra facilities is approved.
The new elevators would boost Richardson’s total primary elevator capacity in Canada to nearly two million tonnes, or 17 percent, up from the current 1.5 million tonnes, or 13 percent.
Glencore would remain Canada’s largest grain company with total primary elevator capacity of 2.4 million tonnes, or 22 percent.
Locations of Glencore-Viterra elevators proposed for divestiture to Richardson:
British Columbia: Dawson Creek, Fort St. John
Alberta: Lacombe, Lavoy, High Level, Provost, Vulcan
Saskatchewan: Assiniboia, Carrot River, Davidson, Kindersley, Alameda, Melville, Langenburg, Maple Creek, Regina-White City, Unity
Manitoba: Red River South, South Lakes
