Belarus’ government has officially launched the construction of a giant, state-of-the-art grain processing complex in Minsk Oblast, designed to produce a wide range of amino acids and up to 1 million tonnes of animal feed per year. With the overall investment cost of $733 million and projected revenue reportedly close to $7 billion per year, this new production promises to take the entire grain industry in the country to the new level of technological development.

The project is going to be a joint venture between Belarus government and the Chinese company CITIC Group, and it will be operated by specially established state-owned Belarusian National Biotechnology Corporation (BNBC). Export-Import Bank of China already has provided a CNY4.290 ($648 million) loan under the new project, while the other costs should be shared by investors.

The new production complex will process 250,000 tonnes of grain, primarily wheat and triticale per year to produce 64,700 tonnes of lysine, 5,900 tonnes of L-threonine, 1,300 tonnes of L-tryptophan, 23,000 tonnes of gluten, 99,000 tonnes of lysine-containing feed, plus 15,000 tonnes of ammonium sulfate crystals and 10,000 tonnes of liquid ammonium sulfate.

Belarus already is exporting agricultural products valued at $5 billion per year, Mikhail Rusyi, deputy Prime Minister of Belarus estimated. On the other hand, the country imports amino acids for the needs of the domestic feed industry for $200 million per year. The new project would enable the country to almost abandon import supplies in this segment, while doubling its overall agricultural exports, Belarus government officials estimated.

“The production complex will consist of 14 plants and there is potential of further increase (of the production capacities),” Rusyi said, speaking during the ground-breaking ceremony in July. “It will be built in three stages. In 2019, we plan to launch a silo while building three large-capacity feed mills. In the first quarter of 2020, these mills are slated to manufacture the first products. Simultaneously, we will be building grain crushing capacities and plants for production of essential amino acids. The entire complex is scheduled to be put into operation in 2021.”

The new complex will occupy 160 hectares, plus 300,000 hectares will be used to grow wheat, triticale and some other raw materials. To make the production independent from the common energy grid, the investors also plan to build a thermal power plant with the capacity of 25MW. The project is informally called “building of the century” in Belarus, as previously there were no productions of that scale in the national agricultural industry.

Competitive costs

The ultimate goal of the project is to create high value-added production that would be competitive pricewise, not only in Belarus but also on the global market.

“Under the project it has been chosen a Chinese technology based on the use of the fourth generation of bacteria (for production of the amino acids), which provides high productivity,” said Ilya Snopkov, deputy director of the BNBC. “In addition, we have right here, just nearby, the production of all necessary raw materials, plus the price for electricity and natural gas in Belarus is competitive to other countries. This creates a basis for highly efficient production. On the top of that, we have also an opportunity to grow a generation of strong top managers.”

“Reaching the full designed production performance, the new production complex will generate $100 million of a net profit per year,” Rusyi estimated. “The payback period on the entire project will be limited to eight years.”

The production costs are crucial for the project, as its future will depend on the export prospects, the government newspaper Soviet Belarus reported. Out of the $7 billion revenue, about $5 billion should be generated from overseas sales, and only $2 billion from import-replacement on the domestic market, Soviet Belarus reported. In total, BNBC plans to export 80% of the manufactured production, the newspaper revealed.

One of the things that would ensure the low costs of amino acids production is that all raw materials could be sourced in Belarus.

For instance, the main raw material for lysine production is triticale, of which Belarus is one the world’s largest producers. The production of tryptophan primarily used is molasses — a byproduct of sugar industry. There are four sugar refineries in the country, so molasses is also not expected to be in short supply, Soviet Belarus said.

Moreover, the new project should take the entire Belarus agricultural industry to the new level of technological development, claimed Oleg Plavskiy, deputy chairman of the Minsk Oblast Executive Committee. The project should boost margins in the grain industry and cut costs for the meat and dairy manufacturers, hence further improving their export potential.

“Some time ago, it was hard to imagine that Belarus would be able to double grain production from 4 million tonnes to the current 9 million tonnes, while more than a half of produced meat and dairy products would be exported from the country,” Plavskiy said. “It could be safely said that the new production complex is the future of Belarus agriculture. It is a basis for the competitiveness of the domestic grain and meat industry.”

These production capacities are only the first stage of the complex, said Danil Uritsky, general director of BNBC, during the ground-breaking ceremony. The second stage will be a network of plants designed to produce some other amino acids, including alanine, valine, cysteine from starch processing, Uritsky said.

There is a broad range of ways to use these products, he said, adding that the second stage of the project is planned to be built on the money generated by the first one.

Export potential

The BNBC production complex will be exporting products to the European Union, China, Russia and Ukraine, BNBC said earlier this year.

It is believed that it is primarily the amino acids that are planned to be exported, although the Belarus Agricultural and Food Ministry declined to provide any further details on the export plans, saying that “the complex is under construction and any information about the precise export plans could be shared when it starts actual production.”

A source in the Belarus government who wished to not be named said that the biggest sales market for BNBC will be Russia. He explained that the demand for the essential amino acids has been seen strongly growing in the country in the past few years, and the geographical proximity of Russia and Belarus would obviously cut the logistics costs. Ukraine also is going to be an important market, while prospects of export to China and the E.U. remain rather vague.

“Both these markets are highly competitive, although amino acids from Belarus could gain a foothold there with time,” he claimed.

In 2017, Ukraine imported 32,900 amino acids, 56.8% down as compared to 2016, the Union of Feed Producers of Ukraine estimated. There was a sharp drop in the import of lysine last year, as the local pig and livestock industries suffered through hard times. More than 80% of all amino acids in Ukraine are imported from China.

“The demand for essential feed amino acids in Russia continues to be at rather high level, which means that despite the implementation of similar projects in Russia, the BNBC project has certain prospects (in terms of export to Russia), providing that there will be competitive prices and sustainable production quality,” commented Lyubov Burdienko, manager of the Russian consulting agency Feedlot.

Russia and Belarus have a free trade zone agreement within the Eurasia Economy Union, so BNBC will be able to export its production duty free to Russia, as well as to Kazakhstan, Armenia and Kyrgyzstan.

“Amino acids are a necessary and most secure source of protein for balancing diets of farm animals, while one of the most unpredictable and powerful factors affecting pricing in this segment (in Russia) are the restrictions imposed by the (Russian veterinary watchdog) Rosselkhoznadzor in relation to various manufacturers and countries,” Burdienko said.

Basically, both consumption and import of amino acids in Russia have been growing during 2018. For example, from January to November 2018, Russia imported 60,000 tonnes of feed lysine, a 30% increase compared to the same period of the previous year, Feedlot estimated. As of November 2018, the average price of feed lysine in the country was 1.7 euros per kg, which was about 30% lower than the level in November 2017.

The situation is very similar with threonine and tryptophan, of which imports to Russia increased by 10% and by 90%, respectively, from January to November of 2018. Since early 2018, the price for tryptophan dropped in Russia by nearly 40%, Feedlot estimated. The main importers of feed lysine are Indonesia and South Korea, China and Indonesia are the main importers of tryptophan, while almost entire volume of feed threonine is supplied by China, according to Feedlot.