BloombergNobles Leiman Seeks to Add Coal Mines, Ports to Fuel...

Bloomberg

Nobles Leiman Seeks to Add Coal Mines, Ports to Fuel Growth
March 14, 2010, 6:10 PM EDT
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e-mail this story print this story digg this save to del.icio.us By Tan Hwee Ann

March 15 (Bloomberg) -- Noble Group Ltd., the commodity supplier backed by China Investment Corp., wants to buy and build coal mines, ports and plantations to benefit from rising Asian demand, Chief Executive Officer Ricardo Leiman said.

We think energy and agriculture are the primary drivers for our growth, Leiman, 43, said in his Hong Kong office. That will drive 70 percent of our earnings growth.

Noble is targeting to double profit to $1 billion in three years as consumption of sugar, grains, coal and other resources increases in Asia. The Singapore-listed company raised about $5 billion in debt and equity last year, with Chinas sovereign wealth fund becoming its second-largest shareholder.

We see opportunities to buy agriculture assets like ports, storage, processing units and were very interested in palm oil plantations, Leiman said. Noble is looking to add oil and gas distribution businesses in the U.S. and other markets, he said, and is studying opportunities to invest together with CIC, which last September spent $850 million buying a 15 percent stake.

We have a strategic alliance to develop an agriculture platform, he said. Primarily, its to buy assets thats most interesting for Noble and China, not only as an investor, but also as a supply need for China.

China is the worlds largest grain consumer and second- largest for sugar.

Shares Rally

Nobles shares more than tripled in the past year, the best performance on Singapores Straits Times Index, as investors bet it will benefit from the economic recovery. Profit slipped 4 percent to $556 million last year during the global recession after hitting a record in 2008.

The company in December agreed to a deal that will make it the largest shareholder in Australias Macarthur Coal Ltd., the worlds biggest exporter of pulverized coal used by steelmakers. It also bought assets from SemGroup LP in the U.S., gaining fuel terminals, storage plants and contracts in six states including Texas and Kansas.

The purchase means Noble owns 17 percent to 18 percent of the distillates and gasoline distribution business in mid- continent U.S., Leiman said. The company continues to look for an opportunity to consolidate in the region, as here we can be a significant distributor, he said, without naming targets.

Theres a big compression in the market, with smaller companies that dont have the capital, and banks dont want to finance, Leiman said. Thats giving Noble, which also produces ethanol, an opportunity to grow, he said.

Building Spree

Noble has embarked on a building spree, including a $214 million oil tank terminal in Netherlands, warehouses and sugar refineries in Brazil, and coal mines in Indonesia and Australia.

The company also hired more than 100 people in the past two years for its energy business, Leiman said, picking up traders and executives during the financial crisis.

We saw the opportunity to attract a team of people in London and the U.S., to build a comprehensive business in energy, he said. All the additions, both in assets and manpower, will start generating some of the revenue growth by the end of the fourth quarter, he said.

Energy and agriculture accounted for about 72 percent of Nobles gross profit last year. Capital expenditure was $1.1 billion in 2009, double the previous year, according to Nobles earnings presentation in February.

Spending should drop this year, unless theres a great opportunity, Leiman said. The company prefers to build rather than acquire, he said.

--Editors: Andrew Hobbs, Malcolm Scott.

To contact the reporter for this story: Tan Hwee Ann in Hong Kong at [email protected]

To contact the editor responsible for this story Andrew Hobbs in Sydney at [email protected]