Midway (ASX:MWY) has signed a binding Memorandum of Understanding (MoU) with grain supply chain company CHS Broadbent for the development of a grain terminal in Victoria.
Under the agreement, Midway, which has a market capitalisation of $65.93 million, will sell a section of its North Shore site in Geelong, for $15.5 million to CHS, who will build and operate an 80,000 metric tonne grain storage and export terminal.
As part of the agreement, both companies will fund equally the cost of upgrading the CQN4 ship-loader to grain standard, a new truck entry point, and site preparation.
Midway will also fund development on its retained part of the site for new site offices, new weighbridges for log trucks, and an extension of the existing woodchip pad and log yard.
CHS will initially lease and then acquire freehold title to 5 hectares of the Midway site to receive, store, and export grain from the second half of 2024.
Midway notes the capital expenditure for the site alterations to accommodate the new CHS Broadbent grain export terminal is estimated at $4.5 million in FY2024-2025.
Midway Managing Director Tony McKenna says the new export precinct deal is the culmination of negotiations that provided clear commercial benefits for all parties.
“CHS Broadbent gains port access for its first dedicated grain export terminal in Australia.”
Meanwhile, CHS Broadbent Managing Director Steve Broadbent says the agreement provides a more competitive pricing opportunity for farmers in Geelong.
“The addition of an export terminal to our supply chain service will see further value delivered to growers, right back to the farm gate.
“The addition of an export terminal to our supply chain service will see further value delivered to growers, right back to the farm gate”
The terminal will be designed with an annual export capacity of 1.5 million metric tonnes. In an average year, we project we will export around one million metric tonnes, which equates to approximately 13 turns per year.”
CHS Broadbent owns and operates grain storage, container packing, and grain freight operations through Queensland, New South Wales, and Victoria.
The company connects Australian grain farmers to domestic and international customers through their own export assets and third-party ports around Australia.
Midway is an Australian plantation management and woodfibre export company headquartered in Geelong.
Write to Aaliyah Rogan at Mining.com.au