Olam to expand wheat milling capacity in Nigeria

Olam International, a Singapore-based supply chain manager and processor of agricultural products and food ingredients, plans to invest $50m in the expansion of the wheat milling capacity at its Crown Flour Mills in Nigeria.

Crown Flour Mills, which was acquired by Olam in January 2010, comprises two port-based milling facilities in Lagos and Warri with a total installed capacity of 1,630Mt per day.

The expansion will add a semolina mill and a flour mill in Lagos, each with a capacity of 250t per day, and a flour mill in Warri with a daily capacity of 250t, increasing Crown Flour Mills’ capacity from 1,630t to 2,380t per day.

The project also includes the expansion of silo space to hold 18,000Mt of wheat storage across Lagos and Warri.

Olam grains business president K C Suresh said this investment is a step forward in the company’s plan to increase its share in the Nigerian flour market, and the addition of two swing mills will facilitate the production of both standard flour / semolina and a special blend of flour and semolina for manufacturing pasta.

"This offers us flexibility in addressing all potential flour needs, i.e. bread, noodle, pasta and semolina," Suresh added.

The construction and commissioning of the project, which is expected to deliver a 20% internal rate of return, is likely to be completed in 17 months, and the company plans to fund the investment through internal accruals.

According to the company, Nigeria currently imports 4Mt of wheat per annum for use in bread, noodles, biscuits and pasta, and the growing demand for these convenience foods can be attributed to increased GDP and growth in urban population.

Olam International is involved in sourcing, processing, packaging and merchandising agricultural products, and it functions in five segments: confectionery and beverage ingredients; food staples and packaged foods; edible nuts, spices and beans; industrial raw materials; and commodity financial services.

Caption: Olam International’s $50m investment is part of its strategy to increase its share in the Nigerian flour market.