The company plans to ship over 5 million tonnes in year one.
Photo courtesy of Adobe stock.
Photo courtesy of Adobe stock.
The joint venture, which will operate under the name Bunge Bahri Dry Bulk Ltd., will provide freight transportation services to regional and other international customers. The company plans to ship more than 5 million tonnes during its first year of operation, ramping up volume over time to double-digit figures. BDB and Bunge will own 60%/40% of the joint venture respectively, and it will be registered and based in Dubai. Financial terms of the agreements were not disclosed.
“This JV is one of BDB’s strategic initiatives to reduce complexity for our customers along the value chain,” said Ibrahim Al-Omar, chief executive officer (CEO) of Bahri. “Working with a leading global player in commodity trading brings the necessary commercial and market intelligence to dry bulk supply and demand fundamentals, and Bunge brings crucial expertise and scale to the table. Their global presence in commodity flows and knowledge of the freight market, coupled with our maritime expertise and strategic position in the region, creates a powerful alliance to meet growing demand for freight services within the Middle East.”
The JV, which will be financed pro rata by BDB and Bunge, will charter and commercially operate Supramax and/or Panamax (and/or other suitably sized dry bulk vessels) initially from the fleet currently owned or managed by BDB and subsequently from third parties.
“Bunge is excited to partner with BDB to strengthen our presence in the Middle East,” said Brian Thomsen, managing director, Bunge Global Agribusiness and CEO, Bunge Product Lines. “We expect the JV to become a carrier of choice for customers importing grains and other agricultural commodities in the Middle East, as well as for dry bulk exports outside of the region. The JV combines Bunge’s expertise in providing freight services and risk management with BDB’s unique knowledge of Middle Eastern customers and their needs to address growing demand in the region.”
This newest joint venture is one of the ways Bunge continues to prioritize perfecting its global footprint with growth.
During a Feb. 15 conference call with analysts to discuss fiscal 2016 results, Soren Schroder, CEO of Bunge, said the focus on maintaining a strong global footprint is one of Bunge’s biggest strengths, and has allowed the company to serve customers year round. Prioritizing a global footprint also has reduced volatility and exposed the company to growth, he said.
“In Brazil, we replaced our Rio de Janeiro mill with a lower cost, more efficient facility and will advance in operating our export terminal in New Orleans,” he said. “We completed a multi-seed crush plant in the Ukraine same location as our port facility and we have our first rapeseed plant coming on in China as we speak. In addition, we are acquiring two million tonnes of soy crush capacity in Northern Europe, which complements our existing Southern European (investments) very nicely. We expect to close on that transaction in the first quarter.”
Partnerships are also a priority for Bunge, Schroder said. The company has created strategic joint ventures in Brazil, Canada and Vietnam that are improving its competitive position and allowing the company to grow in a capital-efficient way. Bunge also has expanded access to critical markets through distribution partnerships, such as OSI and OFI in the Philippines for oil distribution in the Asia-Pacific region.