CHERKIZOVO GROUP LAYS FOUNDATION STONE AT LAUNCH OF THE LARGEST AGRO-INDUSTRIAL BUILDING PROJECT IN RUSSIA

June 29, 2011

At 12pm on June 28th 2011 in the city of Elets, in the Lipetsk region, a ceremonial foundation stone for the unique poultry production complex was officially laid. The ceremony was conducted by the Head of the Lipetsk regional administration, Oleg Korolev, Cherkizovo Group Chairman, Igor Babaev and CEO of Cherkizovo, Sergey Mikhailov.  

In his speech Oleg Korolev officially thanked Igor Babaev for his efforts in the successful realisation of a number of agro-industrial projects and for attracting investment to the Lipetsk region. Korolev said “Today is the start of a building project worth almost 20 billion roubles - this is two thirds of the annual regional budget. The project will have a great social impact and will speed up the social and economic development of Elets and neighbouring regions. The project will provide an additional 4,000 jobs in the region and all the necessary infrastructure will be built”

Igor Babaev made special mention of the importance of such a large-scale complex for Russia: "When operating at full capacity, the live-weight production of poultry will increase to over 500,000 tonnes - this is a large part of total Russian volumes today. The project will boost the development of agriculture in the Central Federal district of Russia and significantly contribute to securing self-sufficient food supply in Russia as targeted by the government”. 

In the course of the ceremony, an agreement was signed regarding the realisation of the investment project between the Lipetsk region administration, Special Economic Zones OJSC, the Elets administration and Kurinoe Tsarstvo OJSC.  

The poultry production and processing cluster will include construction of the following facilities: an incubation site with capacity of 160m incubation eggs per year; 5 broiler sites with capacity of 10m poultry places; 4 parent stock and reproduction flock sites for 900,000 heads; a slaughtering and processing complex with capacity of 24,000 units per hour; a waste treatment and processing complex; multifunctional treatment and purifying facilities; a fodder complex with a capacity of 90 tonnes per hour, which will include storage facilities for 300,000 tonnes of grain and an oil processing complex (this will provide an increase in fodder output for the Group of approximately 512,000 tonnes per year and will increase storage capacity up to approximately 800,000 tonnes). The project also includes construction of office space, infrastructure and engineering facilities, including storage and warehouse facilities, housing and a logistics facility with capacity to store up to 50,000 tonnes of frozen products.  

Production is expected to start in 2013 and the site aims to operate at full capacity by the end of 2015. 

The total investment in the project will be 19.5bn roubles, or approximately $685m, including VAT. Of that amount, 80% is loan funds, with a 10-year tenure, provided by Gazprombank. 

Sergey Mikhailov, CEO of Cherkizovo Group said: “By launching this project, we enter a new level of production quality. Compared to the majority of poultry factories in Russia with 15-30 thousand tonnes of poultry per year, Eletsprom will have a capacity of over 200 thousand tonnes. By undertaking construction of a large-scale integrated complex of this kind, Cherkizovo will be introducing new standards of efficiency and competitive production for the future”.