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Wednesday, August 22, 2012

Noble will target US agriculture assets to tap China demand


Noble Group, Asia’s biggest listed commodity supplier, will target agricultural assets in the US as it seeks to meet demand from China and sees potential for deals across its units.
“It’s hard to be the supplier and partner of choice for China in the grain space, and especially in the corn space, without having significant origination assets in the US,” CEO Yusuf Alireza said today in interview with Susan Li on Bloomberg Television’s “First Up” programme. “Over the medium term, that’s an investment we’re looking to make.”

Noble announced at least US$2 billion ($2.5 billion) of deals in the past three years as it built its sugar operations in Brazil and energy assets in the US and Australia. The Hong Kong-based company last month said it was time to build the agriculture unit after shelving plans to sell shares in the business.

“We’re seeing a consolidation process in the agriculture sector and that’s going to arise very significant opportunities,” Alireza said today. Noble is considering different options including acquisitions and potential partnership with US companies, he said.

Noble’s second-quarter profit rose 39% to US$194.8 million as it posted record sales in its energy and metals units, the company said Aug 13. The agriculture unit, Noble’s second-biggest by revenue, accounted for 17% of sales in the six months ended June 30, according to Bloomberg calculations. Energy is its biggest business, comprising nearly 70% of its sales.

Corn Importer
“China is going to be the largest importer of corn over the next few years and we want to be in the position to help supply that,” Alireza said. The Asian nation was the world’s sixth-largest buyer of corn in 2011-12, according to the US Department of Agriculture. The US was the top corn producer, according to the USDA.

There have been 293 announced agriculture deals in the past year, with a combined value US$13.4 billion, including Glencore International Plc’s bid for grain handler Viterra Inc. for C$6.1 billion ($7.8 billion).

Noble will receive US$800 million from asset sales in the next five months and will look at “interesting asset opportunities,” Alireza said.

“The environment is going to be a tough environment for the next 12 to 24 months,” he said. “One of things we’re making sure of is our balance sheet is strong and we’re in the position to build businesses in down markets and we see opportunities across all three of our platforms.”

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