TWO WESTERN AUSTRALIA MEAT PROCESSING PLANTS PURCHASED BY MINERVA FOODS

PUBLISHING DATE

South American red meat giant, Minerva Foods, has made its first two processing plant investments in Australia, securing the Shark Lake and Great Eastern abattoirs in Western Australia.

The acquisitions, which are subject to Foreign Investment Review Board approval, are smaller facilities by Australian processing standards, but carrying room for expansion. Shark Lake near Esperance has capacity for both sheep and beef processing, while the Great Eastern Abattoir is a sheep-only facility near Tammin. Both facilities are export licensed.

Operations at Shark Lake have been spasmodic, closing in 2017 before being bought and re-opened by Rami Koyu’s Central Agri Group a year later. Shark Lake closed again during 2020. At one point earlier in its history, Shark Lake processed around 25,000 cattle and 500,000 small stock annually.

Shark Lake and Great Eastern have been closed since last year due to COVID airfreight export sheepmeat challenges, but Minerva has plans to expand the capacity and efficiency of both facilities. It says the combined final sheep slaughter capacity could be as high as one million head of lamb and mutton a year.

The investments will be made as part of a €29.6 million joint venture between Minerva Foods (65%) and the Saudi Agricultural & Livestock Investment Co (35%).

Saudi Agricultural & Livestock Investment Co, which also holds a substantial shareholding directly in Minerva Foods, already has large sheep breeding and growing assets totalling 200,000ha in Western Australia, not far from the Great Eastern processing facility, offering improved operational efficiency of the new processing assets.

The joint venture investment will cover both the acquisition of the existing assets, investment to improve plants infrastructure, and working capital. The JV will also support the creation of more than 150 new jobs across the two regions where the plants are located.

The investment in Australia, and specifically sheepmeat is in line with Minerva Foods’ strategic direction and uniquely complemented the company’s operations in South America, the company’s chief financial officer Edison Ticle de Andrade Melo e Souza Filho said.

“It will maximise commercial opportunities and operational synergies, reducing risks and contributing to our strategy to consolidate ourselves in the animal protein export market,” he said.

Assuming necessary approvals are gained, Minerva Foods will become the second South American entity after JBS to invest in red meat processing operations in this country.

Minerva Foods hopes to commence operations at both plants either later this year or in the first quarter of 2022, subject to construction schedules and the approval of local regulatory agencies.

Additionally, Minerva Foods, through its large meat trading operations in Australia already markets sheepmeat produced by other processors into consumer markets in Asia and the Middle East. 

This marketing ‘footprint’ will substantially contribute to the commercial structure of the company’s new WA processing operations.

While Minerva Foods manages beef processing operations in Brazil, Athena’s operations include 16 processing plants across other parts of South America including five in Argentina, three in Uruguay, six in Paraguay and two in Colombia. Athena accounts for close to half of Minerva’s total turnover each year.

The Athena/Minerva Foods business is considered more heavily export focussed than major South American competitor JBS, with Uruguay and Argentina, particularly, having liberal market access to premium markets across Asia, the Middle East and other regions.

Athena and Minerva Foods each represent about 10% of all beef exports out of South America.

The Australian investment revealed today is part of broader company expansion plans, including operations in Argentina and Colombia.

In discussing Australian investment plans last year, Athena said it would target the sheepmeat sector in Australia, with an initial focus on operations in Western Australia. The company initially earmarked ten potential takeover targets among WA sheepmeat processors, ranging in size from 4,000 to 22,000 head per week.

“Western Australia presents a unique expansion opportunity for Athena,” the company told investors.

“Australia is the world’s largest exporter of sheepmeat, and the second largest exporter of beef, with China a main destination for those products. The country’s meat products are perceived as of higher quality, which is reflected through higher prices.

“Australia is by far the most efficient place to produce sheepmeat in the world, in terms of scale and capacity to allow exports.”

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