Agrana, which claims to be the leading sugar and starch producer in Central and Eastern Europe, plans to expand its activities towards the Western Balkans.
The Austria-based group has announced that it will establish a raw sugar refinery in Brcko jointly with the Bosnian-Austrian company SCO Studen & CO Holding/Vienna as 50 per cent partner.
Capital expenditure for this project will amount to about 30 million, and the refinery will have a capacity of some 150,000 tonnes of sugar per year.
The company claims that this will be one of the first industrial investments by a foreign food company in Bosnia and Herzegovina since the end of the Balkans conflict and will create 160 new jobs in Brcko.
"South-Eastern European countries, and especially the Western Balkans, have traditionally been important markets for Agrana's sugar exports," said Johann Marihart Agrana chief executive.
"Because of the termination of C sugar production due to the WTO panel ruling and also as a result of the new EU sugar CMO, sugar exports from the EU are no longer possible. Nevertheless, the Balkans still are among Agrana's core markets, so that the construction of a refining plant for raw sugar is called for to ensure supply of these markets."
Reform of the EU sugar regime has been a long time coming. There has been intense pressure for years on the EU, the world's third-largest sugar producer, to change its heavily criticised regime that artificially which supported internal prices at three times the world level.
Agrana believes that SCO is an ideal partner with a strong local customer network. SCO and Agrana will each acquire a 50 per cent stake in the joint venture Agrana Studen Beteiligungs GmbH/Vienna, which will act as owner and operator of the Bosnian sugar refinery.
SCO does already operate an oil mill for the production of cooking fat in Brcko. The construction start of the new sugar refinery is still planned for 2006, so that operations can be expected to commence as early as 2007. Raw sugar will be used as raw material.
It will be purchased on the world market and transported via waterways and railways. The production capacity of the new Bosnian refinery (150,000 tonnes) corresponds to the volume of EU export sugar that Agrana has so far sold in this region via SCO Studen.
Agrana operates nine sugar production plants in Central and Eastern Europe - two each in Austria, the Czech Republic and Hungary, one in Slovakia and two in the EU accession candidate country Romania. In the past 2005/06 financial year, some 900,000 tonnes of sugar were extracted from beets and about 282,000 tonnes were refined from raw sugar.