Dongwon Looking To Buy SNCDS Tuna In Senegalff

Looking to decrease dependency on Pacific & get into the EU market

Seoul-based Dongwon is interested in making acquisitions in Africa and in Europe as part of a strategy to become a truly global player. Dongwon already owns canned tuna company StarKist in the United States, sources say.

“Dongwon is in a very aggressive, expansionist mode,” said an Asia-based tuna trader quoted in an Intrafish article.

“I know that Dongwon is looking seriously at an acquisition in Africa, and/or Europe after taking the ‘leap across the Pacific’ in buying StarKist,” said a U.S.-based trader.

“They got StarKist for a knock-down price and are making a lot of money with it. Dongwon has looked at Ghana, Senegal, Turkey, at least,” he said.  “The Chairman, JC Kim, is ambitious”, the IntraFish article continues.

Recently, Dongwon has been expanding its activities in the Atlantic Ocean with the acquisition of the tuna purse seiner Santa Maria, which it bought from the French tuna fishing company Cobrecaf.  This is the second French owned seiner the company has purchased.

There are indications that Dongwon is now building a stronger presence in the Atlantic, so it can build a presence in the EU canned tuna market. Earlier, such ambitions were not fulfilled when the company lost out to Thai Union Frozen Products in a bid to acquire the European tuna company MW Brands.

The tuna plant of Societe Nouvelle de Conserves du Senegal (SNCDS) in Senegal, West Africa, could play a role in a European strategy. SNCDS employs around 1,500 people and is one of the largest canneries in Senegal. It is for 51 percent owned by the Senegalese state, along with a company called Pecheurs de France and a Senegalese investor owning 35 percent and 14 percent.

Although the cannery has an installed capacity for 25,000 metric tons of whole round tuna a year, it has only been achieving about 30 percent of its capacity over the last few years. The main problem has almost continuously been the lack of supply of tuna raw material.  The turnover is estimated somewhere around USD 17 million annually. The main export market being France.

According to sources of Intrafish, the potential SNCDS deal is ongoing. However Dongwon failed to confirm this, or to comment on the reports.

By having its vessels supply the SNCDS cannery and by giving a financial impulse to the company, enabling it to buy also frozen skipjack tuna from other large vessels, Dongwon could create a company which could export canned tuna to Europe duty free.  Senegal -as ACP country- does not pay any duty when exporting to the European Union, as long as the vessels meet the rules of origin.  When flagged correctly, the two Dongwon seiners could possibly reach these criteria.

A deal between the EU has already provided Spanish and French tuna seiners fishing rights in the Atlantic waters of Senegal. These vessels could also supply to SNCDS once it is better capitalized.

At this moment, Dongwon is strongly focused on the Pacific Ocean, where most of its tuna purse seiners are fishing. It also has a considerable fleet of longliners, which are active globally. In American Samoa, the company owns the StarKist cannery which has 500 M/T capacity per day and is the largest tuna canning operation in the world.

But with increasing reduction measures on tuna fishing in the Pacific, and its remoteness from the EU market, Dongwon might consider lessening its dependence on the Korean and US canned tuna markets and the Pacific Ocean, by starting an operation in Africa, in Senegal.

Dongwon has already a dominant position in the Korean market of canned tuna; through its sister company Dongwon F&B, which reported sales of USD 1.203 billion (Euro 875.9 million) for 2010.

StarKist, which is part of Dongwon F&B reported sales USD 652.2 million and recorded a net profit of USD 43.2 million.

Dongwon F&B is a separately listed company of Dongwon Industries, both of which are part of the Dongwon Group.

Dongwon Industries is the fishing and supply arm of the group, which had a turnover of USD 493.7 million in 2010 with a pre-tax profit of USD 108.9 million, leaving USD 82.8 million after taxes.