Lurgi Builds Largest Extraction Plant in Europe as Oilseed Market in Supply Squeeze.

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Researched by Industrialinfo.com (Industrial Information Resources, Incorporated; Houston, Texas). As U.S. soyoil prices rose to the highest level in 19 years during the last week of February, Europe's edible oils market stopped trading, and at the same time, the opening of the largest single edible oilseed plant in Europe was announced for late in 2004.

Jug Rusi (Rostov, Russia), one of Russia's leading agricultural holdings, has contracted Lurgi AG (FSE:MGT)(Frankfurt, Germany), to cover the engineering, supply, erection and commissioning of the new plant in Rostov, as well as operator training.

The plant in Rostov comprises a seed treatment, seed pressing, and a downstream extraction step. One single extractor unit will process 3,000 tons of raw seeds per day making the plant the largest single production unit in Europe, Russia, and the former soviet states. The production capacity will enable the plant to handle as many as four to six trainloads of raw seeds and finished products a day. The large scale of the plant is paralleled by dedicated logistics. It has its own port on the River Don giving customers the decisive advantage of direct access to the Asov Sea and the Black Sea.

Edible oil and fodder meal will be produced in the plant using soybeans, sunflower seeds, and rapeseed as feedstock. The vitamin rich edible oil will be used for human consumption and the meal, with high protein content, will be used for chicken, cattle, and hog feed.

Lurgi has already built over 200 edible oil extraction plants, with capacities ranging from 100 to 4,000 tons per day with the company's technology chains allowing for the complete processing of renewable resources from extraction through to desodorization.

Factors in the price surge in Europe's imports of soya beans were pushed by concerns about reduction of U.S. domestic supplies by drought and disease and drought reducing crops in South America. The production of Brazil and Argentina, combined, tops U.S. production. Large sales to the voracious Chinese market have also kept a burner under the price.

The Rostov plant could be part of a trend to make Europe less dependant on supplies from the Americas that in 2002 accounted for 95% of world soybean exports. The U.S. exported 27.5 million metric tons (mmt) (44%), Brazil 20.5 mmt (33%), Argentina 9.1 mmt (14%), and Paraguay 2.8 mmt (4%) with the rest of the world only exporting 3.3 mmt (less than 5%).

In terms of total world oilseed production, in 2002 soybean production was 194 mmt (60%), cottonseed 32.9mmt (10%), rapeseed 32 mmt (10%), peanuts 30.9 mmt (9%), sunflowerseed 23.7 mmt (7%) palm kernel 7.5 mmt (2%), copra 5.2 mmt (2%).

With prices for Dutch soyoil quoted at $560 a ton on an f.o.b ex-mill basis, new entrant countries could be expected in oilseed for export production and the South American output could continue to increase.