VEB.RF and Sber to Finance Construction of Export-Oriented Oil Extraction Factory in Altai Territory

• Total project value over 17 billion roubles
• Up to 400 new jobs with an average monthly salary of over 68,000 roubles
• Tax revenues of 5.5 billion roubles over the next 12 years

VEB.RF and Sber will finance the construction of a new Sigma Group factory for high value-added products. The project consists of two stages: construction of an oil pressing facility and an oil extracting unit together with its own cogeneration plant as well as refining and packaging lines.

An estimated annual export potential of the project is about 200,000 tonnes of oil and oil meal (extracted residues) or over RUB9.5bn. Asian countries are priority markets for export.

The project will receive financing under the Project Financing Factory programme. The total project value exceeds RUB17bn, including RUB14.9bn in syndicated lending for 12 years and VEB.RF’s commitment up to 22%. The commissioning of the first phase is planned for mid-2027.

About 80% of the equipment, including solid fuel boilers and a turbine, will be purchased from Russian manufacturers to reduce risks of sanctions or delays in commissioning.

The new oil extraction factory with a daily processing capacity of 1,200 tonnes of oil seeds will be located in Lenki, Altai Territory, which is among the top nine Russian regions with the highest sunflower seed yield. High-quality sunflower oil, rape oil and oil meal will be obtained by pressing and extraction.

The two-stage project will contribute to the economic performance and social progress in the Altai Territory, involving the creation of up to 400 new jobs with an average indexed monthly salary of over 68,000 roubles, in particular for local residents of Stepnoe Ozero. This workers’ settlement, about 50 km away from Lenki, is included in the second group of socially and economically vulnerable monotowns. The project will also result in increased tax revenues to the budget and non-budgetary funds up to RUB5.5bn over the next 12 years.

The investment project aims to protect the environment and comply with the principles of sustainable development: the biomass cogeneration plant using sunflower husk will produce heat and electricity for the factory. So the circular economy principle will be implemented. In general, the factory will dispose of 100% of the waste (husk) to reduce adverse environmental impacts.

Managing Director of VEB.RF Asset Management Timur Temirgaliev: “VEB.RF’s Project Financing Factory is a financing mechanism aimed at supporting priority national projects by attracting long-term investment. The project stability will be achieved through a government subsidy to compensate a potential increase in the key rate and through a reserve Tranche B to cover potential project cost overrun or interest payment at the investment stage. The new factory will focus on oil crop processing, which will significantly increase the localisation of raw materials to be processed in the region from 29% to 89% and reduce more than sixfold the oil crop exported or sold outside the region. This is in full compliance with the 2035 Strategy for social and economic development of the Altai Region designed to increase oil crop processing capacities and non-resource exports of high value-added products, including sunflower oil.”

Deputy General Director of Sigma Group Elena Usmanova: “Sigma Group is systematically implementing its strategy for expanding oil and fat crop production in regions with poor capacities for oil crop processing. The Altai oil extraction factory project has been taking shape for a long time given that an agreement on social and economic partnership between the Government of the Altai Territory, Blagoveshchensk District Administration and Sigma Group was signed in December 2021. But only recently have we managed to agree upon project financing terms.

“In addition to economic, social and environmental benefits, the project will also have a positive impact on the agricultural storage and transportation sector. In particular, elevators that are currently used as transshipment points will be in high demand for storage of raw materials to be subsequently processed within the region, which will significantly ease the burden on transport networks to increase regional exports.”

Sigma Group is the largest agribusiness in the Ural Federal District and the Republic of Bashkortostan. The Group’s core activity includes oil crop processing (sunflower and rape) and domestic and export sale of processed products, namely vegetable oils and granular meal.