7 March 2023

Strategic Solution: Alebor Group on VST Transshipment Terminal Construction on the Border with Romania

INTERVIEW to the news

As hostilities spread in our country, ports stopped functioning, and grain exports switched to Ukraine’s border with the EU. The market started contemplating the construction of transshipment terminals on the border. Even if everything goes well with the ports in the future, the need to diversify export routes has become urgent. The amount of investments made by businesses in the construction of terminals is US$ 90 million. Alebor Group was among the companies that brought such a project to life.

Oleksiy Tsurkan, CEO of Alebor Group’s elevator division, described the peculiarities of the current grain season in the Group, the decision to build a transshipment terminal on the border with Romania, the project implementation, and the work prospects.

Current grain season at Alebor Group elevators

At the outbreak of the war, all three elevators of Alebor Group had a sizable amount of grain to be exported. If it hadn’t been for the war, it would have been as planned: the grain would have been unloaded and loaded in a long-established process. Traditionally, each of the Group’s elevators made about 5 turnovers per season. This marketing year, however, things are different.

As of today, all three elevators of Alebor Group have shipped a total of 180 thousand tons of grain to the market. For the record, Voronovytske Grain-Collecting Station alone had a capacity of 140 thousand tons of grain even before the new silos were installed. And the new facilities with a total capacity of 57 thousand tons were put into operation ahead of the current late grains season, i.e. in September.

This year, the dynamics of the elevators’ operations were out of the picture — having storages full of grain, it was challenging to sell it. It was particularly hard to sell it because of the gap between Ukrainian and global commodity prices.

“The features of the grain season are frustrating. First, the ports were blocked. Then, when the grain corridor was opened, the price was much lower than that of grain received at our elevators. But we had to unload the storage facilities, so all the grain was exported at a loss,” recalls Alebor Group’s CEO of the elevator division Oleksiy Tsurkan.

Alebor Group handled mostly corn this season, representing up to 80% of the total, with wheat and sunflower making up the rest. The company’s own and customer grain in storage was 50 to 50. Despite the fact that farmers owed nearly nothing to Alebor Group’s elevators for the services they were provided, the company’s grain storage facilities became subsidized this season.

The question arose: how is the situation with exports improved?

“We had to make a strategic decision when the war broke: what to do next? The first model assumed that the sea would be cut off forever, and something had to be done about it. The second model suggested that the sea might be reopened in the near or distant future. But the grain corridor is an unstable instrument, so to speak, with ships’ movement unpredictable… Last month, the ports had very low loading due to the lack of ships, port elevators were full, our railcars were in queues, and so on,” explains Oleksiy Tsurkan.

In light of all the circumstances, the Group decided to advance to the land borders and build a grain complex — the Vadul-Siret Terminal, VST. But this decision was of no easy matter.

“We had to choose: the grain season is coming, so should we buy products and do business or build a terminal? At some point, we even halted construction for three days to assess what was actually happening,” says the CEO.

Eventually, it was decided to skip the season but create a completely new direction for Alebor Group to ensure 100% overland exports. The company invested its own funds in the construction of the terminal, as the management is convinced that a strategic facility is more important than a smooth grain season.

Selecting equipment for VST

Equipment of Ukrainian manufacturers — KMZ Industries, Elevatorpromservice (Mykolaiv), and Ukrainian Weighing Systems — was installed at the VST.

“We had to consider what equipment to buy. Option one was very good, very favourable offers from European suppliers, they even offered financing, and option two was a compelling, even irresistible, desire to support a domestic manufacturer. We recognized all the risks: Karlivka is in the Poltava region, there was shelling in the area, and Mykolaiv is under fire nearly every day. We decided to buy the scales from UWS, as this is a new company for us, so we accepted the risk. UWS is a Kharkiv-based company, but now they have moved to Vinnytsia. Thus, we preferred to support local producers,” explains Oleksiy Tsurkan.

The equipment by KMZ Industries and European manufacturers was virtually identical in terms of cost, he added, but the Group cooperates with KMZ Industries on a long-term basis and has a good knowledge of the silos and conveyors and their quality, so there were no hesitations. In fact, the manufacturers delivered all the equipment for the terminal in due time. Only Mykolaiv-based manufacturers delayed the delivery of lifts and unloaders.

“We had three missiles hit their workshop. The workers patched the holes, so to speak, and kept on. I think they are Heroes with a capital H. And that’s why we want to stand by them,” says Oleksiy Tsurkan.

The top manager says that the company’s only target was to complete the terminal quickly and put it into full operation right away. This is another reason why they refused to experiment with the quality of untested equipment and turned to proven suppliers.

The new transshipment terminal features silos and transportation equipment by KMZ Industries, lifts by Elevatorpromservice, and truck and rail scales by Ukrainian Weighing Systems. Aquari is the construction contractor.

“Aquari is our steadfast partner as well. They are great — day and night, in rain and snow, they accept concrete, weld metal, it’s just exceptional,” says Alebor Group’s chief of elevator division.

He also highlighted the services of Megapromsnab, which completed the railway tracks at the terminal to a very high standard and within the terms agreed upon.

Construction specifics of the VST

On July 24, two all-new excavators purchased by Alebor Group arrived at the VST construction site. And on July 27, they began the first earthworks: removing and piling up the fertile soil layer, as required by sanitary standards.

Two railway lines were built at the enterprise to reload grain from wide-gauge Ukrainian railcars to European narrow-gauge ones.

Transshipment is carried out right from railcar to railcar, via a transportation system and a headhouse. The terminal also has three 10,000-capacity flat-bottomed silos for grain storage and filling. This is the first phase of construction.

“Simultaneously, we worked on two truck intakes, which are already in operation, a weighing complex for trucks, and a road from the weighing complex to the unloading station and a turning area, which is about 600 meters. As of today, we have already mounted two 10,000-ton silos, and we are currently building the third one,” says Oleksiy Tsurkan.

The terminal construction project is rather non-standard for the company, as it involved a new type of foundation for the Group.

“The foundations are on piles, but the silo bin’s basement gallery is not underground, but above ground. Just like in portside terminals. A cushion block was cast on the silo piles, and then there are pillars that support the second cushion block, and the silo is being built on it. A conveyor runs in the centre between the pillars. It is located at ground level because the groundwater is very high there,” explains the executive.

The foundations at the VST were a tremendous job. Even the scales and the lift had to be installed on piles. This was something Alebor Group had never done before. The groundwater level is high and the soils are sedimentary.

“The soils are complex. At a depth of 4-8 meters, the bearing layer of gravel lies. Before that, there is water. Under one silo, we have three types of piles: 8 m, 10 m, and 12 m, because the gravel layer is wave-like. Gravel is a very dense rock, and a 10-meter pile cracks and cannot pass the top level mark, the top zero. Instead of cutting the pile and wasting precious time, we used various lengths of piles,” says the expert.

Those were the problems that emerged as the project progressed. All decisions were made online, right on the construction site, to minimize time wasted.

“Concrete overspending is about 200 cubic meters per silo compared to a conventional foundation. All the foundations are waterproofed to a very high standard and at a high cost. The additional height of the bucket elevators, extra costs for metal, but there is no other way,” admits Oleksiy Tsurkan.

The construction was delayed by the untimely delivery of concrete. There are two concrete plants in the area, but they are either serving military or civilian orders, hence concrete was delivered to the construction site of the VST irregularly. Alebor Group even considered building its own concrete plant.

“We are building and we see that the concrete plant will pay off. Probably, we will buy a front loader and two mixers. This way, we will get cheaper concrete and be able to control its quality. We will receive concrete on time, when we need it, not when it can be provided to us. If the concrete had been delivered on schedule, we would have built the plant three weeks earlier and all three silos would have been up and running sooner,” estimates Oleksiy Tsurkan.

The construction period of the first phase of the grain terminal was a top priority for Alebor Group, he says, and it was accomplished through well-coordinated teamwork.

“Many thanks to our team. We developed projects, approved them, got technical requirements, and did electrification works pretty fast. The contractors used all their skills and experience. A team of lawyers and economists worked, and a fairly large group of people was involved,” he notes.

New terminal operation prospects

On July 27, the first buckets of earth were pulled out by excavators, and on October 27, the first Romanian freight train arrived at the new transshipment terminal. Ukrainian grain railcars were already waiting for it at the site.

“The first couple of days we spent learning, adjusting the scales and so on. In November, we handled 17 thousand tons of grain, 25 thousand tons in December, and 40 thousand tons in January,” says Oleksiy Tsurkan.

The railcar-to-railcar transshipment capacity of the VST is 300 tons per hour, while the truck capacity is 200 tons per hour. There are two lifts at the terminal, which makes a total capacity of 400 tons per hour.

Loading a Romanian 32 railcar freight train with a total net weight of 1,600 tons now takes the terminal 12 hours. 32 European railcars is the maximum number allowed by the European railroad standards. After the construction of the second loading station is completed, the time for processing a Romanian train will be reduced to 8 hours.

To be fair, Alebor Group has no problems with receiving railcars, for the company has already established itself as a reliable partner.

“Our company is committed to service and quality. We have everything for this: a powerful reloading machine, and high-capacity grain reception. Everything is industrial-scale, and shippers value that,” says the executive.

There is currently one flow line at the terminal. There are pits for 60 tons each under the truck receiving units. The VST handles two crops simultaneously, for example, corn is reloaded from trucks to railcars and wheat is received in silos. In the future, there will be two technological flow lines.

“We are now weighing seriously on continuing the construction and adding 70 thousand tons to storage capacity to reach a total of 100 thousand tons. Then the second line of silos will be placed on the other side of the head-house, and thus we will have two flow lines to handle two crops at once,” Oleksiy Tsurkan shares the plans.

Oleksiy Tsurkan mentions that only this new terminal is currently operating profitably in the Group, while other elevators had a poor season. But it is the construction of the VST that will allow them to work efficiently next season, without looking back at whether the Black Sea Grain Initiative will be extended or not. When the war is over and the ports return to normal operations, the Vadul-Siret Terminal will have other business tasks to do.

“If the sea remains open, the Group’s elevators will operate as usual, as they have always done. We will switch VST to the elevator mode to receive grain from the Khmelnytskyi, Ternopil and Chernivtsi regions. In this case, I think it will easily utilize its capacity,” ponders Oleksiy Tsurkan.

The CEO of Alebor Group’s elevator business is confident this investment in the construction of the VTS will not be a waste for the company.

“Even operating as a regular elevator, its location will pay for itself. There is a demand for it there. And we must not forget that it is located close to the border. Not only exports but also imports are possible there. The VST has a large area of 17 hectares and is set parallel to the railway station. It is even slightly larger than the station. We can work there with a variety of imported cargoes, including consumer goods, fertilizers, and receive bulk cargo from abroad. This direction will be in great demand even with open water and operating Black Sea ports,” the expert assures.

Planning work in the midst of war and hostilities in the country is an ungrateful business, but Alebor Group still intends to boost the storage capacity of the new terminal to 100 thousand tons by the start of the late grain group receiving in the new season, and add operational silos and a dryer.

Maya Mukha, Elevatorist.com

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