It also secures its access to one of the major demand regions in that market.
The deal includes Mercury’s complete assets of employees and expertise, along with its international deep-water terminal and storage facilities on the Isle of Portland.
Mercury Commodities had already been acting as a sole agent for the soybean product supplies of Glencore Agriculture, helping the trader to develop the UK market for protein meals.
Glencore Agriculture, part of Glencore Plc, is one of the world’s major crushers of soy bean and oilseed rape, and producers of crush co-products.
“Along with our growth plans, it became obvious over the past few months that Mercury also wanted to expand but it needed access to more capital. The acquisition move makes investment decisions a lot easier, and ensures less conflict - it is not easy to make such decisions when you have two different entities, two different size businesses cooperating,” James Maw, managing director of Glencore Agriculture, told us.
He said Glencore now wants to invest to improve Mercury’s storage and handling facilities in Portland.
“I was down there last week ago looking at how to spec it with Mercury directors, Frank Nickel and Will Watt. We still don’t know how much capital will be needed from a costings point of view. We haven’t finished that study yet.
“However, one of the main issues we are continually coming up against is the lack of space. We want to double the storage capacity. We want to look at how to make the facilities more efficient at handling product.”
Maize, palm kernel expeller
The company said the enhancement of the Portland site will give it a new platform for the import of animal feeds from Glencore Agriculture’s global crop processing facilities.
“We want to increase volumes and widen the feed grains portfolio. We are mainly handling soy products. We are not handling the volume of maize imports or sugar beet imports we would like to, we don’t have the tonnage necessary to meet existing demand. We don’t have palm kernel expeller in the Portland facility either, something we are keen to change,” he said.
The company said the existing 50,000 tons of modern storage and handling facilities at Portland also offered a highly responsive export route for arable farmers in the south of England, to take advantage of any trade opportunities for milling wheat or spring barley.
Glencore has been having discussions with port executives as well. “A major new berth opened there last week, allowing access to deeper water. Portland will have the potential to discharge loads from larger ships, giving us a lot more opportunities,” he said.
Feed industry knowledge
Expansion of a business requires investment in the right staff, in people with the experience of the feed industry, he added. “It is great to have the Mercury directors on board. We have also recently taken on additional staff in logistics and trading.”
Mercury’s Nickel and Watt are set take on the roles of head of animal feed products and head of feed product marketing, respectively, at Glencore Agriculture UK.
Glencore said it is also looking to expand the import arrangements at Teesport and other ports. The trader is targeting the prime livestock producing centers of the UK, including the major pig and poultry markets of Yorkshire, Lincolnshire and Humberside, along with cattle production in the south-west, north-west and Scotland.