Glencore will sell off the Australian malting assets it acquired as part of its $6.1 billion takeover of Viterra in a deal that has major consequences for WA.
The Australian malting operations are the biggest in the southern hemisphere and the WA operations are by far the biggest of plants in six States positioned close to ports and transport links to premium barley growing areas.
The Forrestfield plant adjoins the CBH Metro Grains Centre and has direct rail access to Fremantle Port and the CBH grain terminal at Kwinana.
It is estimated the malting assets were valued at about $280 million in the multibillion-dollar Viterra sale, which settled in December.
They could be on-sold for up to $310 million amid speculation prospective buyers include GrainCorp, EuroMalt, big Australian-based agribusinesses and CBH.
The malting move was revealed after a Melbourne source said Glencore had hired Bank of America Merrill Lynch to advise on the sale.
It is understood there are "couple of dark horses" in the field of prospective buyers and that Glencore expects to settle a deal within months. A memorandum of interest could be issued next week.
The business operates under the Joe White Maltings brand name and has a host of prestigious brewers among its clients.
Australia-wide, more than 520,000 tonnes a year is produced for brewers in Singapore, Japan, Thailand, Vietnam, Korea, Indonesia, Cambodia, Papua New Guinea, Philippines and Malaysia and the local market.
China, which imposes a tariff on malt exports, is the only major Asian market where it does not have a footprint.
The huge Forrestfield plant, which includes eight big football oval-sized vessels for germinating barley as part of the malting process, has an annual manufacturing capacity of 210,000t.
All the malt produced in WA is exported, apart from a small amount supplied to Gage Roads brewery.
The state-of the-art plant has integrated rail-loading facilities with CBH at Forrestfield and exports about 7500 containers a year in bulk shipments. CBH is faced with writedowns on the Forrestfield site, which has 200,000t storage capacity.
It is understood Glencore - a miner and the commodities trader - does not consider malting part of its core business in Australia.
The malting business has made annual profits of about $30 million over the past five years amid regular ownership changes.
AusBulk bought Joe White Maltings, founded in Ballarat during the gold rush of the 1850s, in 2002 and merged it with Adelaide Malting Company.
ABB Grain became the parent company after a merger with AusBulk in 2004. Viterra bought ABB Grain in 2009. Growth product 7 The worldwide production of malting barley is forecast to reach about 7 million tonnes this year.