China's Cofco Shuts Argentina Edible-Oil Plant on Trade, Economy
(Bloomberg) -- Cofco Corp. has shuttered a plant in Argentina for refining soybean and sunflower oil as an economic crisis and the U.S.-China trade war take their toll.
The Legitimo plant in Lanus, Buenos Aires, which made edible oils, closed after “a significant reduction in local demand, unfavorable market conditions and rising idle capacity,” China’s top food company said in a Jan. 4 statement.
Argentina is in the midst of a recession as sky-high interest rates -- in place to calm inflation and revive confidence in the peso, which lost half its value last year -- cripple growth.
At the same time, the trade war -- coupled with a drought and a tax change -- has meant less work for the nation’s oilseed crushing industry, with idle capacity surging to about 50 percent. That’s because U.S. competitors have been getting beans on the cheap after China all but disappeared as a buyer.
Cofco said its decision to leave the refining business in Argentina will mean it can focus investments on sourcing oilseeds and crushing them for export. It doesn’t envisage further closures.
A hundred and ninety five employees who worked at Legitimo have been protesting. On Monday, authorities announced mediation talks between Cofco and trade union officials to negotiate the conditions of their departure.
©2019 Bloomberg L.P.