STE. AGATHE, Man. – Viewed from the highway south of Winnipeg, Canada’s newest canola crushing plant shimmers in the spring heat like a mirage on the horizon.
But turn into the driveway of Canadian Agra and you’ll find chief executive officer Helmut Sieber working hard to ground this plant in reality.
On a May 27 visit, a half-dozen workers scurried about, putting the finishing touches on paint in and around the four buildings worth between $43 and $47 million.
Sieber, wearing pinstriped dress pants and a monogrammed shirt with cuff links, strode about the site, his cell phone ringing incessantly, showing off the plant to a visitor.
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It was a busy day, he explained. He was expecting the plant’s first truckload of canola. He had to catch a plane in Winnipeg at 5 p.m.
Yet Sieber spent more than a hour with a reporter to address the facts about the plant.
Canadian Agra has been the subject of much speculation since its 1996 announcement of an agricultural business park on 800 acres near this town in the Red River Valley.
Sieber admits the company has been plagued with problems, but said he has ignored what others in the industry have been saying about his plant.
“We had to fix our problems first,” he said.
This spring, he came to Ste. Agathe to tackle the challenges of getting the new plant running.
Like Lee Iacocca, former head of Chrysler, Sieber said he’s working for $1 per year, absorbing the cost of his own expenses.
In return, he hopes shareholders will approve a package of stock options and profit sharing incentives at a June 30 meeting.
“At the end of the day, I’m sure it will work out for me,” he said.
He expects the plant to be in full operation at the end of June.
Some crushers have said profitability in the industry has been poor given current seed prices and oil and meal values.
Not Sieber. He believes there’s plenty of seed around, and money to be made from crushing it. “We run it (the margin calculation) every day and it looks very good,” he said.
While other crushers worry about supply, and even make arrangements for canola from other countries in case they run out before the new crop comes off in August, Sieber is nonchalant.
He said he’s finalizing a supply agreement with a grain company he won’t yet name.
Getting seed won’t be a challenge, he said. “It’s more difficult to find a buyer for the product.”
But he has a buyer.
The plant can crush 1,000 tonnes per day, with oil going to a company in Taiwan that has agreed to buy three years’ worth for $390 million.
Many agricultural companies that rely on trade in Pacific Rim countries have been hurt by the devalued currencies of the region.
But Sieber said the problem is short-term, and he prefers to focus on opportunities in the growing population of the region.
He’s optimistic tariffs will come down, making it possible for more oil to be exported to countries like Japan, that traditionally import seed to crush in their own plants.
In fact, he said the company may look at taking a financial interest in Asian refining facilities in the future.
Sieber also said he’s negotiating a $245 million deal to sell the plant’s meal for 60 months to an American company with operations in Canada.
Walking through the plant, he points out labor-saving automation and modern equipment. Foundations are already poured for doubling capacity, an expansion he hopes will happen within the next year.
“It’s made for the future,” he said.
