Apr. 13. 2009
Marubeni Corporation (hereinafter called "Marubeni") has concluded a Letter of Intent with Sinograin Oil & Fats Corporation (hereinafter called "Sinograin Oils & Fats"), a subsidiary of Sinograin (China Grain Reserves Corporation) , China’s largest grains reserve operations company, regarding comprehensive collaboration of the two parties.
<The backgrounds and the aim of this LOI>
Marubeni has been seeking opportunities in China, where substantial growth can be expected both as a supplier and a consumer, as a part of its Foods strategy in the Distribution & Trading fields, which is positioned as a key strategic business field in "SG2009", our mid-term management plan.
Marubeni aims to import four million tons per year of soybeans for crushing, which is about 10% of the total import to China. With Marubeni's collaboration with Sinograin Oils & Fats, which the Group plays a pivotal role in China's grains reserve program, and at the same time is expanding its own crushing capacity, will be able to integrate Sinograin's domestic logistics with Marubeni's overseas procurement ability, by which we will be able to supply one of the most competitive oilseeds, such as soybeans and canola, or oil products, such as soybean oil and palm oil, to the Chinese market.
Also, we will construct a procurement scheme for soybean for food from China, which Marubeni will market into Japanese and Korean markets, using Sinograin Group's domestic procurement / logistics management capacity. We will also integrate knowhow accumulated by the two Group's operation of import silos, as well as exchange personnel for better understanding of both companies. We will also consider joint investment not only in China but also in grain-producing areas such as South America.
<About Sinograin Oil & Fats and Sinograin Group >
Sinograin Oil & Fats is a 100% subsidiary of Sinograin, China's largest grains reserve / oilseed crushing firm encompassing the whole of China, and engages in materials procurement, logistics control, processing, and sales all by itself. Sinograin Oils & Fats is undergoing construction of 6 crushing / refining facilities over China, which two are already operational. Expected crushing capacity of the six factories amount to 6 million tons, which is more than Japan's total crushing capacity. Also, Sinograin aggressively imports oil products from overseas, and with 0.7 million tons of soy oil and 0.2 million tons of palm oil, Sinograin itself imports 1.5 times as much oil as the whole of Japan.
Sinograin is a State-owned enterprise directly supervised by the State-owned Assets Supervision and Administration Commission which is a special agency under the State Council, China's highest administrative body. Sinograin owns 251 warehouses over China, and their total storage capacity adds up to 25 million tons. Sinograin handles 75 million tons of grains, which by itself is two times the whole import quantity of Japan.