Cablegate: Louis Dreyfus Commodities Moves Closer to Large


DE RUEHGB #3307 3561415
P 221415Z DEC 09



E.O. 12958: N/A
SUBJECT: Louis Dreyfus Commodities Moves Closer to Large
Agricultural Discharge and Processing Investment in Umm Qasr

1.(SBU) Summary and Comment: In a recent meeting with Agricultural
Counselor, Louis Dreyfus Commodities' (LDC) Iraqi-French
representative Dr. Khazal Abbas dusted off previously established
plans for the construction in Umm Qasr of a USD 400 million
multi-commodity discharge, storage and Qsing facility. LDC is
prepared to begin its investment once they have acquired/leased
approximately 125 acres in Umm Qasr. There is one potential area at
Umm Qasr port which may be suitable and LDC is looking to engage
with the Ministry of Transportation on developing this site or other
potential parcels. For Iraqi consumers, the benefits of this project
would be greater availability of agricultural commodities at lower
prices. End Summary and Comment.

The French Grain Multinational Intends to Establish Deep Roots

2. (SBU) In a meeting with Embassy representatives on December 13,
LDC's Abbas indicated the company, among the world's largest
grain-trading multinationals, concluded that the time is ripe to
proceed with this initiative. LDC's pursuit of this project began
in early 2007, and they now seek a long-term port space lease for aQed investment in a 275 million euro ($400M) vegetable oil
refinery, sugar refinery and grain terminal/flour milling operation
in the Port of Umm Qasr.

3. (SBU) Abbas informed us that LDC is ready to move ahead; they
have preliminary approval from the office of the Prime Minister, and
the Ministry of Trade, and now need to engage the Ministry of
Transportation. LDC will require a 125 acre site suitable for
unloading Panamax-sized (50,000MT) cargoes. Once the issue of space
is finalized, they intend to construct in three phases: 1. a
vegetable oil refining facility (300TMT/yr.) which will take two
years to complete; 2. A sugar refining facility (500TMT/yr.); and,
3. a grain terminal (200TMT/storage) and flour mill (450TMT/yr.) A
rail link was discussed and is preferred, but Embassy
representatives explained that no grain currently is conveyed by
rail northward from Basra owing to the lack of railcars.

Prescient Planning Should Position LDC for a Market Primed to

4. (SBU) With a market of close to 30 million and an economy poised
to expand and subsequently provide for more consumer spending, LDC
recognizes the market potential for a number of commodities in which
they deal, but do not currently supply to Iraq, including sugar and
vegetable oils. At least for the next few years, LDC is counting
heavily on supplying commodities including wheat, sugar and
vegetable oil to the State Company for Foodstuffs for Iraq's public
ration system and believe that they will enjoy a competitive
advantage over competitors by having dedicated port and processing
facilities located in Iraq. LDC is also anticipating the subsequent
marketing of branded products produced at these facilities. The
flour milling operation is an addition to the original plan as
conceived. LDC has no plans for an oilseed crushing facility at
this time. This had been suggested last year in preliminary
discussions as a possibility that would address the need for protein
meal (livestock feed) by poultry/livestock producers. Abbas
further suggested that the company's thinking was that they could
recoup their direct investment outlay in three years time from the
date of completion.

5. (SBU) Comment: While no other multinational grain operators
have a presence in Umm Qasr, LDC's plans for significant processing
and follow-on marketing in Iraq represent a considerable break from
Qand follow-on marketing in Iraq represent a considerable break from
the "discharge and go" approach that has characterized commodity
exports to this market. Although there are still a myriad of
details to be ironed out, Dreyfus's plans are timed to capitalize on
what will hopefully be an Iraqi investment and business climate more
conducive to outside participation. End Comment.

© Scoop Media

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