A major Chinese grain company appears to be pressing forward with plans to build a large canola crushing plant in Western Canada.
In April 2011, Chongqing Red Dragonfly Oil Co. entered into a three-year joint venture agreement with Clean Power Concepts, a Regina firm that produces filtered canola oil, feed meal, lubricants, chemicals and additives.
According to a copy of the agreement found on the U.S. Securities and Exchange Commission website, the exclusive purpose of the venture is to lease or acquire one or more 200,000 to 300,000 tonne crushing facilities and build an 850,000 tonne new crushing facility, which would rival the Richardson International and Louis Dreyfus plants in Yorkton, Sask.
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The initial capital investment for the project was $3 million, 95 percent of which came from Chongqing.
Chongqing Red Dragonfly Oil Co., a subsidiary of Chongqing Grain Group, is the largest state-owned oil producer in southwestern China, according to a Google translation of the company’s website.
The firm has 460 employees and total assets of $6.9 billion and produces 350 million tonnes of oil annually.
There has been little news about the project since the joint venture was signed, but the plan appears to be developing.
Clean Power Concepts issued a news release in January stating that Chongqing Red Dragonfly Oil Co. had received final Chinese government approval to proceed with the joint venture.
A release in May said the two companies had established Pan Pacific Green Food Inc. to “establish operations in the agricultural processing and commodities sector.”
The agreement said Pan Pacific would establish an office in Vancouver in the near future.
“We are pleased to be moving forward in a process that has been significantly more complex than we had envisioned,” Michael Shenher, chief executive officer of Clean Power Concepts, said in the release.
Shenher declined to provide new details when contacted for this story.
“I am in the process of putting together a comprehensive update for shareholders and the public, and I will share that with you in the near future,” he said in an e-mail.
In a February 2011 interview, Shenher said the plan was to build a minimum 600,000 tonne crush facility in Saskatchewan or Alberta at a cost of $70 to $90 million.
It is his second attempt at developing a large-scale canola crush plant. In spring 2008, Shenher, then CEO of Canadian Green Fuels, said he would build a 460,000 tonne crushing facility and 200 million litre biodiesel plant in McLean, Sask., 37 kilometres east of Regina.
The project had fallen apart by fall, and the company had to announce it was delaying its planned $50 million share offering.
“Our financing sort of went away when the markets sort of evaporated there in September (2008),” said Shenher in the 2011 interview.
