POSCO, Bartlett to set up grain procurement joint venture

South Korea’s POSCO International Corp. plans to invest in Bartlett and Company’s soybean processing company within the year and set up a joint venture with the US grain exporter for the procurement of raw grain and flour to foray into the US food commodity market, POSCO said.

The trading and energy exploration unit of steel giant POSCO Holdings Inc. on Monday signed a joint venture framework agreement with Bartlett in Kansas on those matters.

Bartlett, a unit of Savage Company, is a major US grain merchandising and milling company with about 15 terminals in the US Midwest. It exports wheat, corn and soybeans to Mexico.

The Kansas-based company handles about 10 million tons of grain and operates the 10th largest flour mill in the US.

At the signing ceremony, POSCO International Chief Executive Jeong Tak and Bartlett President Bob Knief agreed that POSCO would invest in Bartlett’s to-be-established soybean processing company and collaborate to export the latter’s food commodities.

They also discussed the ownership structure, governance, headquarters and business philosophy of their raw grain procurement joint venture.

The US is the world's largest grain-producing country, producing 550 million tons annually of the three major grains -- corn, soybeans and wheat -- and exporting 140 million tons of them.

With a partnership with Bartlett, POSCO will be able to build a food commodity value chain in the US and increase its grain trading capacity to 5 million tons per year by 2030.

POSCO International is working to expand its global supply chain of food commodities beyond the US.

It is looking to build a triangular food belt connecting the Black Sea, North America, and Oceania by securing large-scale grain cultivation areas in Australia after the Russia-Ukraine war ends.

In 2019, POSCO International established a grain export terminal in Ukraine.

Since entering the grain trading market in 2015, POSCO International's food commodity business has swelled tenfold.

It is now South Korea's largest food commodity trading company, handling 8 million tons of foodstuffs, equivalent to half of South Korea's annual imports of food commodities.

“South Korea's grain self-sufficiency rate last year was only 19%, dependent on imports of major grains except rice,” said a POSCO International official.

“We will strive to expand our global supply chain of grains by increasing grain procurement capabilities and investing in overseas assets to become one of the world's top 10 food companies and contribute to national food security,” he added.

Write to Hyung-Kyu Kim at khk@hankyung.com
 


Yeonhee Kim edited this article.