NutraCea in j.v. to build flour mill in Indonesia
January 25, 2008
by Eric Schroeder
PHOENIX — One day after filing for provisional patent protection with the U.S. Patent and Trade Mark Office on its technology to stabilize wheat bran, Phoenix-based NutraCea on Friday said it reached agreement with Fortune Financing Overseas Ltd. to build a new flour mill in Indonesia that will incorporate the new technology. Fortune Financing is an affiliate of Pacific Advisors Holding Co., which is one of the largest flour mills in Southeast Asia.
As part of the joint venture, NutraCea will build a full scale, proof of concept wheat bran stabilization facility to validate the technology and promote its widespread use to convert wheat bran into a food ingredient.
NutraCea said construction on the new mill is expected to begin in mid-2008 with operations set to start in early 2010. The estimated construction cost for the project is in the range of $35 million, depending upon variability in the size and actual equipment costs of the plant.
Construction costs, revenues and profits will be shared 51% by NutraCea and 49% by Fortune Finance. NutraCea will lease its proprietary stabilization equipment to the venture, while maintaining all of the intellectual property rights to the technology and patents.
The facility is expected to produce 180,000 tons per year, generating revenues of more than $100 million. Margins also are expected to be significantly better than those of traditional mills due to the inclusion of NutraCea’s cost effective stabilized wheat bran technology, the company said.
Lim Ai Ping, president of Fortune Finance, spoke glowingly of the venture’s possibilities to "take advantage of a new and unique technology to improve the profitability of our wheat milling operations."
"Indonesia imports over 4 million tons of wheat flour annually and the ability to produce more product locally offers tremendous cost savings associated with shipping, before we even take into account the increased yield that we anticipate achieving," Ms. Ai Ping said. "We look forward to expanding the realm of possibilities that this proprietary technology offers."