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2017 October 12

Agroport “Ustye Dona” in anticipation of border check point inauguration

This year has seen inauguration of Louis Dreyfus Company’s first grain terminal in Russia, in the Azov District of the Rostov Region. Aleksey Tkachenko, Director General of Agroport “Ustye Dona” LLC, tells IAA PortNews about the construction, current and expected activities.

— Mr Tkachenko, how long did it take to build the terminal?

— Louis Dreyfus Company Vostok LLC acquired the construction-in-progress asset in August 2015 with the permit to put the loading terminal into operation obtained from the Azov District authorities as early as in December 2016.

The initial project of the terminal was revised with the expansion of the storage area for agricultural products from 30,000 t to 50,000 t, truck terminal and motor transport area added to the project as well as a separate laboratory building.

In March 2017, our loading terminal was included into the limits of Azov seaport by the RF Government Decree.

On September 8, an inter-agency committee met to check the compliance of the RF border check point located at the terminal to the requirements on construction/reconstruction/equipment/outfitting of buildings and premises necessary for arranging of border/customs/etc. control. The border check point located at our terminal will start functioning in several days! That will let Agroport “Ustye Dona” LLC accept foreign flag vessels and crews.

—When was the grain terminal inaugurated officially?

— First trucks with grain were handled as part of start-up and set-up operations in February 2017. April saw the first vessel loading. Official inauguration of Agroport “Ustye Dona” terminal was held on 2 May 2017 in the presence of Vasily Golubev, Rostov Region Governor, and Margarita Louis-Dreyfus, Chairperson of Louis Dreyfus Holding B.V.

— What is the scope of investments into the project? Were they private or did the state take part in performing of dredging works or in construction of the approach road?

— Only private resources of the company were used for the project implementation. Total investments into construction exceeded RUB bln.

Meanwhile, we were widely supported by Rostov Region and Azov District authorities, all the issues were handled promptly. The project on construction of a loading terminal in the Azov District was on the list of 100 investment projects on development of the Rostov Region supported by the Government. This project will be completed with inauguration of the border check point.

Besides, Agroport “Ustye Dona” LLC is a participant of the Federal Targeted Programme “Development of Russia’s Transport System in 2010-2020” гг.) with the border check point also being the last thing to complete.

— You are a subsidiary of Louis Dreyfus Company. Is that the first project implemented by the Company in Russia?

— The history of Louis Dreyfus Company exceeds 160 years. The Company is among the global leaders when it comes to sales and processing of agricultural products.

LDC used to own port facilities in Rostov-on-Don in Tsarist Russia.

The Company returned to Russia about 20 years ago as a grain trader. After 20 years of trading the Company initiated a project on construction of a loading terminal for storing and ran of grain. Agroport “Ustye Dona” LLC is the first port project of Louis Dreyfus Company in today’s Russia. Apart from this, the Company owns about nine line silos in the South of Russia.

— Louis Dreyfus Company previously operated only via deepwater ports of Russia, didn’t it?

— Not at all. Previously, they operated both via deepwater ports of Russia and shallow ones including Rostov-on-Don and Azov. An average agricultural year (you never know what may turn up, like embargo, for example) resulted in shipment of 1.5-2 mln t from deepwater ports and up to 500,000 t via shallow ones.

— What does the grain terminal of Agroport “Ustye Dona” include?

— The terminal has a laboratory with two passways, with weighing and sampler units, 3 truck terminals, 10 silos with capacity of 5,000 t each, two berths with total length of 300 meters, an administrative building and auxiliary facilities like storm water and sewage treatment systems and fire water storage tanks.

— What is the terminal’s design capacity?

— The terminal of Agroport “Ustye Dona” is capable of handling 700,000-800,000 t per year with the expansion to 1 mln t being quite realistic.

— What ships do handle?

— Currently, we handle only Russian flag ships, all of them are chartered ships. We do not have our own fleet. We work with vessels of 3,000 – 5,000 t in displacement.

95% of the fleet are short-sea vessels bound for port Kavkaz. Of course, we can load agricultural products for export to Turkey or Egypt but the ships should fly the flag of Russia.

When the season of short-sea shipping declines in October it will be very important to start working with foreign vessels. This problem is also felt now but we manage to cope with it.

Therefore, we are looking forward to the findings of the inter-agency committee to put the RF border check point into operation.

— What is the depth at the terminal?

— The depth at the terminal is 5 to 5.3 meters depending on wind. The scope of dredging performed by Portostroy LLC totaled 340,000 cbm.
— How is grain delivered to the terminal?

— Grain is delivered to the terminal only by motor transport. We have built a 4.5-kilometer approach road. Unfortunately, we do not have a railway yet.

— How many people work at the terminal today?

— We number 84 employees. The team was built from scratch and no one has left so far! The employees are mainly from Azov and neighboring settlements, some people are from Rostov.

It should be noted that we pay much attention to occupational health and safety. Apart from compliance with general RF regulations we set our own standards, give instructions and arrange work safety days.

— Are there any environmental standards?

— We are very serious about ecology. Of course, we comply with environmental standards of the Russian Federation and we move beyond. For example, we had an approved design of water treatment facilities but we did not like it in some respects and we deliberately increased the cost of construction and implemented a different project. The initial project provided for construction of a 300 cbm storm water basin. According to our calculations that was not enough and we had a 2,000 cbm basin built.

State-of-the-art equipment for treatment of sewage and storm water is installed at the terminal, the treatment is under strict control.

— How much cargo has the terminal handled since its inauguration?

— In 2017, the terminal handled 244,000 t (as of 14 September 2017). Operating in the field of grain storage we usually take into account not calendar but agricultural year. This agricultural year (from 1 July 2017) we have handled 117,000 t of the new crop.

The terminal is already capable of handling 700,000 – 800,000 t per year which is only hindered by current inability to handle foreign flag ships.

If the border check point opens soon and we can accept foreign flag ships we will handle 500,000-600,000 t of agricultural products this year.

— Can the port handle non-grain cargo in case of possible changes in the market or any state restrictions?

— The port is ready to handle other loose cargo, except for dangerous cargo, big-bags, packaged cargo.

Yet, we are primarily focused on transshipment of grain according to the company’s expectations. It should be noted that launching of a grain terminal at the port of Russia is a strong impetus for Louis Dreyfus Company, a commercial office in Rostov-on-Don has started intensive activities.

RF Government is also interested in the sale, not spoiling, that heavy yield. We hold regular briefings focused on facilitation of exports.

Throughout the last month the terminal has been working close to its storage capacity limit, we are permanently close to being filled up.

— Is there a possibility to build additional storage facilities or berths, if necessary?

— Our territory is 20 hectares with only 4.5 hectares built up. So, there are 15 hectares available. There is room for growth!

Interviewed by Elena Tkacheva.