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Louis Dreyfus eyes investment in port logistics

ABU DHABI, May 19, 2016

Commodity trading group Louis Dreyfus Company said on Wednesday it is looking for investments in port logistics in the Middle East, especially Egypt, as the sector continues to lag behind market growth.

"The markets are growing and in most cases the ports remain largely governmental and have probably been a little bit slower to move than the private sector," James Wild, head of Louis Dreyfus Middle East and East Africa told Reuters.

Wild added his company saw opportunities in Saudi Arabia as the country seeks to privatise its grain operations and in post-sanctions Iran.

"We see opportunities with certain countries opening up both from a sanctions perspective like Iran and also from potentially a privatisation programme with Saudi Arabia both of which provide volume which is important for us," he said on the sidelines of the Global Grain conference in Dubai.

Wild said it was too early to tell whether Louis Dreyfus would actively seek a stake in the Saudi Grains Organization (SAGO).

Saudi Arabia is considering privatising a host of state bodies under its Vision 2030 economic reform plan announced last month, aimed at reducing the kingdom's reliance on oil.

SAGO is looking to sell a stake to a strategic buyer as part of its privatisation for which HSBC's Saudi Arabian arm has been chosen as its advisor, sources told Reuters earlier this month.

"On our own [it is] unlikely but it is very early days so we have to wait and see what is being proposed," Wild said, regarding a possible stake.

Asked whether Louis Dreyfus would continue to sell wheat to the Egyptian government through tenders after confusion over Egypt's specifications for the presence of a common grain fungus, Wild said it would as long as standards were feasible.

"We will continue to actively participate and work within the regulations that are there but if we can't adhere to them we can't do the business," he said.

A conflict between Egypt's agricultural quarantine authority and the agriculture and supply ministries that erupted last year over the level of ergot fungus allowed in wheat imports has led to a series of shipments to the world's largest importer being rejected and a crisis in confidence with global suppliers.

Egypt has said it will allow wheat imports with trace levels of the common ergot fungus of up to 0.05 percent, while government agencies try to resolve the dispute.

The country's quarantine authority had applied a zero ergot policy which traders says is impossible to guarantee and has disrupted shipments.

"We will always comply with country standards but if they are unrealistic that gives us only one choice," he said. – Reuters




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