ADM targets acquisition of Polish crushing, biodiesel assets

In a move that would strengthen its European oilseed processing, food manufacturing and biodiesel capabilities, Decatur, Ill.-based agribusiness giant Archer Daniels Midland Co. signed a public tender offer to purchase a majority share in Elstar Oils S.A., a Warsaw-listed company that specializes in the production of quality refined vegetable oils and fats for the food industry and biodiesel market. The purchase is subject to approval by relevant antitrust authorities.

Elstar Oils, located in northern Poland, operates a rapeseed crushing, refining, solid-fat packaging and oil bottling facility in Czernin and a 100,000-metric-ton-per-year biodiesel facility in Malbork. Elstar’s core business activity primarily involves rapeseed and other vegetable oils production where the products are directed at the domestic, business-to-business market and industry customers throughout the country. The company’s subsidiary, Biopaliwa S.A. located in Malbork, has produced biodiesel since 2008. In that same year, the Elstar Group completed the last stage of a four-year-long investment process, which resulted in a doubling of annual rapeseed crush capacity from 200,000 to 400,000 metric tons.

“Poland is an important origination and consumer market for ADM,” said Brent Fenton, president of ADM Europe. “Elstar’s location in the heart of a rapeseed growing region, with easy access to the ports of Gdansk and Gdynia, complements our existing presence in the region and will enable ADM to further strengthen its position in Eastern Europe. The biodiesel plant will enable ADM to develop the biodiesel market in Poland and fits well within the company’s integrated business model.”

ADM’s operations in Poland include an oilseed crushing and refining facility in Szamotuly that refines and bottles retail vegetable oils, and country elevators in Slawa Wielkopolska and Chroscina. ADM has a joint venture company, BTZ, consisting of an import and export terminal in the port of Gdynia and it recently announced plans to jointly construct a new grain warehouse to expand capacity. The company also has a joint venture with Princes to expand the distribution of bottled vegetable oils in Poland.

Meanwhile, ADM announced that it has achieved the International Sustainability and Carbon Certification to supply sustainably grown soybeans to the European market. As a result, ADM will be the first company to provide Europe with ISCC-certified sustainable soy that meets the European Union’s new Renewable Energy Directive requirements. Up to 250,000 metric tons of sustainable soybeans will be processed at ADM’s crushing facilities in Hamburg and Mainz, Germany, by autumn 2011.

“The ISCC allows ADM to maintain our leadership position in the importation of soybeans to the European market while encouraging sustainable farming practices among growers,” said Jake Beaverson, general manager, ADM European Soybean Crushing. “ADM is committed to the responsible, sustainable development of agriculture. Through this certification, we will be able to meet the increased demand for products that have been sustainably sourced and responsibly processed.”

To qualify for certification, companies must meet strict criteria for sustainable biomass and biofuels production, as well as reduced emissions of greenhouse gases over the entire production chain. As part of the certification process, ADM and select farmers in South America underwent intensive audits to evaluate the sustainability of their business practices and processes, as well as traceability within the supply chain. ADM then worked directly with growers to implement best practices to meet certification requirements for export to the European market.

The ISCC was developed to guarantee that biofuels and biomass for biofuels are produced in compliance with recent EU legislation that requires, by January 2011, all biofuels and biomass in Germany to be certified according to the EU-RED requirements. The EU established the new RED legislation to enforce social, labor and environmental requirements for the production and importation of biofuels.

“While the demand for certified materials is driven by the biofuels market, we also anticipate a growing need for sustainable soy in the food and feed markets,” Beaverson said. “Through our sourcing operations in South America, our processing facilities in Europe and our extensive logistics network that links the two, ADM will continue to meet the evolving needs of European customers.”