Sydney, Sep 9 (Inditop.com) An Indian consortium led by the Bangalore-based diversified business house, the Bhoruka Group, is investing Australian $63 million ($54 million) in an edible oil refinery at Wagga Wagga, 470 km south-west of Sydney in New South Wales.
The agribusiness venture has been named Riverina Oils and Bio Energy and ranks among the largest value-added greenfield investments by an Indian company in Australia’s eastern seaboard, the promoters said.
The refinery’s construction will commence Sep 11. Besides offering major new export opportunities for Australian farmers, the plant will create jobs and generate annual revenue of Australian $150 million ($129 million).
“It is our first overseas venture. When I visited the region two years ago, I was amazed to see the vast agricultural fields, few people and almost no buildings. I realised the region had great potential for agribusiness and decided to invest here,” Bangalore-based Bhoruka Group chairman S.N. Agarwal, told Inditop.
Agreed Melbourne-based founding partner and managing director of Riverina Oils D.D. Saxena: “We felt from logistics, manpower, infrastructure and raw materials it seemed like the right place.”
The 170,000-tonnes a year oilseed crushing and edible oil refining plant will offer farmers in the area new crop opportunities. Initially, the project plant will crush canola, safflower, cottonseed, soybean and sunflower seeds.
“The production is expected to start by October 2010. We source the raw material, crush and refine oil at Wagga Wagga, with equipment sourced from all over the world,” said Agarwal, who is also chairman of Riverina Oils.
The company will export some of its 65,000-tonnes-a year refined vegetable oil output to food industry customers in India, Japan, and other parts of Asia, Europe and the US.
“India is the world’s largest importer of edible oil. That makes the Indian connectivity of this project hugely important, both in terms of the investment and the export market,” Saxena, told Inditop.
Riverina Oils will also produce 105,000 tonnes a year of vegetable protein meal for the Australian poultry, dairy and animal feed industry.
Agarwal’s Bhoruka Group is also keen to explore the possible use of biomass, such as the residue from vineyards citrus orchards and sugar cane farms, to generate power.
The project would benefit this rural town with the creation of 65 direct jobs in phase one, and up to 500 indirect jobs in the construction, transport and logistics sectors.
Almost 15,000 truckloads or rail container movements a year would be needed to carry 350,000 tonnes of raw materials and finished products.
“Once the plant is up and running, we expect to spend more than A$60 million a year buying raw materials and other products from the Riverina region,” Saxena said.
He envisages farmers in the region will plant an extra 75,000 hectares of crops to deliver 100,000 tonnes of oilseed to the crushing plant and another 50,000 hectares will be planted in other parts of Australia.
“Safflower oilseed will give farmers an option to plant up to August on a fixed price contract,” said Saxena, who has earlier run large food and agribusiness ventures for multinationals such as Unilever and Bakrie, and for India’s Thapar Group.
“It’s a product, which is both water-efficient and good for crop rotation. Soybean will replace imports and give farmers a summer crop.”
Both Agarwal and Saxena say Australia has high level of technical skills in agriculture and it is much cheaper and easier to value add to the raw material here, convert it into oil and then ship it overseas direct into the export markets.
For example, in India, oil seeds incur 35 per cent import duty whereas edible oil has no duty on it.
Riverina Oils founding partners include Ravi Uppal, who is executive director heading the power division of Larsen and Toubro. State Bank of India is providing the finance – its first greenfield financing project in Australia.
