Louis Dreyfus Expands in Russia With Azov Grain Terminal Deal

Louis Dreyfus Commodities BV acquired a grain terminal in Russia’s Rostov region as the agricultural commodity trader seeks to increase market share in the country hit by western sanctions over the conflict in Ukraine.

The Don river terminal, with two berths and six silos, will be used for shipping grains on sea-river vessels, Louis Dreyfus said Friday in an e-mailed statement. Operations are expected to start in early 2016 with an initial capacity of 500,000 metric tons with plans to increase to 1 million tons. The company didn’t disclose the price it paid.

The acquisition is “an important first step towards developing new alternatives in logistics, considering that small port flows account for a big part of total grain export volumes in Russia,” Cesar Soares, the company’s regional head of grains for Europe and the Black Sea, said in the statement.

U.S. and European sanctions imposed on Russia over the conflict in Ukraine have reduced foreign investment. Louis Dreyfus said in its 2014 annual report that the impact on the company of a partial import ban was “limited” and it was able to manage its exposure to the region. Russia’s ban on dairy exports and slowing Chinese demand contributed to excess supply and lower prices, Louis Dreyfus said in the annual report.

Along with Archer-Daniels-Midland Co., Bunge Ltd., and Cargill, Rotterdam-based Louis Dreyfus is one of the four dominant agricultural trading houses known as the ABCDs. The 164-year-old company has operated in Russia from more than 50 years, according to its website.

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