Ukrainian sunflower oil producer ViOil, which assesses its global export market at 4%, in the period form 2011 to 2016 is planning to spend up to $160 million on capital investment, including for the construction of a new oil refinery with a processing capacity of 547,500 tonnes of sunflower seeds by the end of the 2014 financial year, reads a company offering memorandum for an initial public offering (IPO), which has been sent to Interfax-Ukraine.
The report says that it is expected to expand capacities of the company's Chernivtsi and Vinnytsia sunflower oil refineries.
Compared to the 2010 financial year, the productivity of Chernivtsi sunflower oil refinery will be increased by 25% in 2012, to 182,500 tonnes of sunflower seeds per year, and tripled in 2014, to 438,000 tonnes, through the replacement of refining equipment.
At the Vinnytsia sunflower oil refinery the company will boost production capacity by 117% by early in the 2013 financial year, to 547,500 tonnes of sunflower seeds. At the end of the summer, the construction of a second oil-bearing crop refinery, which will mainly refine rapeseeds, will start at the Vinnytsia sunflower oil refinery. Its production capacity will reach 440,000 tonnes of sunflower seeds, or 372,300 tonnes of rapeseeds or soybeans. It is expected that the new refinery will be launched in the middle of 2015.
In addition, ViOil is building boilers at the Vinnytsia and Chernivtsi sunflower oil refineries, which will allow it to use a wide range of fuel. It is expected that the boilers will be launched in the 2012 and 2014 financial years respectively.
The offering memo also says that currently the company is finishing talks on the prolongation of a tolling contract signed in November 2010 with Melitopol oil refinery (Zaporizhia region) on processing sunflower seeds and rapeseeds. As a part of the contract, as of March 31, 2011, a total of 19,200 tonnes of seeds were refined and 7,600 tonnes of oil and 7,100 tonnes of vegetable oil were produced.
According to the company, in Q1, 2011 the company was fifth in the production of sunflower oil in Ukraine with a 6.7% market share, while Privat group's share was 8.7%, Polohivsky oil refinery's 5.7%, MHP's 5.2% and Creativ's 4%. The leaders of the market were Kernel with a 22.7% share, Cargill with 15% and Bunge with 11.6%.
ViOil said that its refineries are located in western Ukraine, where competition between vegetable oil refineries is lower, as the borders with the European Union are closer, which gives the company good chances to boost capacity.
ViOil owns and operates two oilseed processing plants, with a total annual processing capacity (if operated 365 days per year) of 511,000 metric tonnes of sunflower seeds, and a network of 12 storage facilities, including the two storage facilities at its plants and 10 freestanding silos located in close proximity to its plants, with an aggregate storage capacity of 360,000 tonnes of wheat (the equivalent of 186,180 tonnes of sunflower seeds).
