Noble Group's Leiman Seeks to Expand Oilseeds Business in Black Sea Region

Noble Group Ltd., the commodity supplier backed by China Investment Corp., is seeking to expand its grain and oilseeds business to take advantage of rising global food demand, Chief Executive Officer Ricardo Leiman said.

“We want to grow in the Black Sea in terms of the grains and oilseeds business,” Leiman said in an interview yesterday. “That’s an area that we’re looking at. We want to continue to grow in China. We already have a big pipeline of projects.”

Noble is expanding its energy and agriculture businesses, which generated almost three quarters of its gross profit last year, after raising funds from debt and equity sales. Rival Olam International Ltd. said last week it was in merger talks with Louis Dreyfus Commodities, the world’s biggest rice trader, adding to a spree of agricultural mergers and acquisitions.

“You need to diversify your supplies,” Chung Yang Ker, an analyst at Phillip Futures Pte., said by phone from Singapore. Expanding in the Black Sea region would allow Noble to increase sources of oilseeds as global demand for vegetable oils and biodiesel expands, Ker said.

Noble fell 2.1 percent to S$1.87 on the Singapore stock exchange at the 5:05 p.m. close, taking the year’s loss to 11 percent. The company was the biggest sunflower seed oil exporter to India last year, Leiman said in Singapore. The Black Sea borders Ukraine and Russia, the world’s two biggest sunflower seed growers, Georgia, Turkey and Bulgaria.

Rising Food Prices

“We may look at sunflower seed opportunities” in the Black Sea region, Leiman said . “We are looking at origination, logistics, industrial assets.”

Rising food demand and adverse weather have driven up prices for wheat, corn and soybeans as much as 62 percent since June 1. The United Nations Food and Agricultural Organization Food Price Index rose last month to the highest level since Sept. 2008, after drought slashed harvests in Russia, the world’s third-largest wheat grower last year.

The Hong Kong-based commodities supplier this month agreed to buy Sempra Energy Solutions for $582 million in cash and assumed debt, allowing it to trade energy in 16 U.S. states.

The company is “looking carefully at the provision of nuclear fuel to Asia,” Tobias Brown, Noble’s executive chairman, said in the same interview. “There’s no doubt that one cornerstone of energy production in Asia will be the use of nuclear power generation.”

Uranium Demand

China’s demand for uranium may rise to 20,000 metric tons a year by 2020, more than a third of the 50,572 tons mined globally last year, according to the World Nuclear Association. India’s needs will grow 10-fold to 8,000 tons as it quadruples nuclear-power capacity to 20 gigawatts, according to Jagdeep Ghai, finance director at state-owned Nuclear Power Corp.

Noble bought a 5.1 percent stake in USEC Inc., a U.S. provider of enriched uranium, Brown said. Of all the nuclear plants being built, about half are in China, he said.

“Noble is planning to expand it energy-trading team into more than just an intelligence gathering business that supports its existing ethanol supply chain,” Chris Sanda, an analyst at Daiwa Securities Capital Markets, said in a report today.

The “management’s vision for this division is one that includes crude-oil, refined petroleum products, clean fuels, electricity, natural gas, coal, uranium and carbon credits,” Sanda said.

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. It added more than 100 people in the past two years for its energy business, Leiman said in March.

China Investment Corp., the nation’s sovereign wealth fund, bought an $850 million stake in Noble last year.

To contact the reporters on this story: Luzi Ann Javier in Singapore at ljavier@bloomberg.net; Dinakar Sethuraman in Singapore at dinakar@bloomberg.net;

To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net

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