Mitsubishi Corp. said it will set up a shrimp seafood venture in Thailand, a day after rival Mitsui & Co. announced a sugar investment in the same country as Japanese trading houses step up their focus on food.
Mitsubishi, Japan’s biggest trader by market value, agreed to set up a shrimp business with Thai Union Frozen Group by buying existing facilities on the coast of the Southeast Asian nation and building new ones, the Tokyo-based company said in a statement. Mitsubishi will own 49 percent of the venture and the total project cost will be 3 billion yen ($36 million).
“This strategy will help Mitsubishi respond to increasing global demand for food products and to fulfill the role of providing a stable supply of resources,” the company said.
After a decade of rising profits on the back of Chinese demand for coking coal and iron ore, Japan’s biggest trading companies are shifting focus to food, utility and transport businesses as bulk commodity prices and demand wane. Mitsui, which relies on raw materials for more than 90 percent of profit, has said it plans to expand its non-commodity assets in the next one to two years to account for 30 percent of net income within six years from about six percent last year.
Japanese trading houses have looked to food in the last few years for new business growth, as well as stable returns during volatility in industrial commodity prices.
Mitsui, Japan’s second-largest trader, said yesterday it will buy 11.1 percent of Thailand’s Khonburi Sugar Public Co. and its related company Mitsui Sugar Co. will buy a further 5.6 percent. The purchases will cost the two Mitsui companies about 1.15 billion baht ($38 million). They will also provide the Thai producer with equipment and marketing support to expand.
Mitsui, which today said it will make Mitsui Foods Co. a wholly owned subsidiary, gained 3.9 percent to 1,240 yen in Tokyo at the close, the biggest gain in two months. Mitsubishi rose 2.4 percent to 1,630, the most since Nov. 15.
Mitsubishi last year invested in meat and livestock in China with Cofco Corp., entered the salmon fish-farming business in Chile and in 2012 added grain collection and coffee plantations in Brazil, as well as phosphate mines in Peru. The trader will make food one of its key areas, Chief Executive Officer Ken Kobayashi said in Tokyo in April.
In the Thai venture Mitsubishi targets annual capacity of 10,000 metric tons of shrimp, the company said. Total annual consumption of wild and farmed shrimp globally is about 6.5 million tons, it said.
“The goal is to be well positioned to respond to imminent increases in global demand for shrimp products,” Mitsubishi said.