This picture: Ricardo Leiman, chief executive officer of Noble Group Ltd. Photographer: Munshi Ahmed/Bloomberg

Noble Group Ltd, the Hong Kong-based supplier of energy, food and mining commodities, sees Mongolia as its next opportunity to expand in coal and build on its record 2010 profits.

“We have staff looking at several opportunities” in Mongolia, especially in exploration companies, Chief Executive Officer Ricardo Leiman said on a conference call yesterday. “Mongolia will be an area specifically for quarter two. We look at developing a similar model there to what we have in Indonesia and Australia.”

Noble won exclusive overseas marketing rights for PT Berau Coal, Indonesia’s No. 5 producer, in November, adding to its Australian assets, which include Gloucester Coal Ltd. The Berau deal will “contribute nicely” to 2011 earnings, Leiman said after his company posted record annual net income of $606 million from $57 billion in sales.

Aspire Mining Ltd., which explores for coal in Mongolia, said Jan. 17 that Noble bought 4.1 percent of its shares and is in preliminary talks on how the two can cooperate. Xanadu Mines Ltd., which plans to develop coal and iron ore fields in Mongolia, said Feb .3 it has struck an alliance with Noble. The company has an office in Mongolia and ships coal from the region, Leiman said.

Noble climbed 6.3 percent to S$2.18 at 9:57 a.m. in Singapore trading for its biggest gain in more than five months. The company led gains in commodity suppliers in the city-state, with Olam International Ltd. gaining 1.4 percent and Golden Agri Resources Ltd., the world’s second-largest palm oil planter, adding 3.9 percent

‘Well Positioned’

Noble completed 28 deals worth $3.37 billion since January 2000, according to data compiled by Bloomberg, as the company transforms the business from trading to buying and running some energy and food producing assets. Founded by billionaire Richard Elman, a former Southeast Asia chief at 110-year-old commodities trader Phibro, Noble counts China’s sovereign fund among shareholders.

Noble is “well positioned to leverage its supply chain to expand our business further,” Leiman said.

Commodity prices have jumped as adverse global weather, from droughts in Russia to floods in Pakistan, hurt wheat, rubber, cotton and palm oil harvests, and disrupted the flow of commodities including coal and iron ore over the past six months. The Thomson Reuters/Jefferies CRB Index of 19 raw materials rose 16 percent in the last three months of 2010, the fastest since the second quarter of 2008.

Higher prices for its commodities, which include coffee, cotton, grains, coal, iron ore, oil, and aluminum, helped Noble to triple profit to $247.4 million in the three months ended Dec. 31, from $84.9 million a year earlier, the Singapore-listed company said in a statement to the stock exchange yesterday. Sales rose 82 percent to $17.4 billion.

Stock Price

Until today, the earnings and price gains hadn’t filtered through into the stock. In the 12 months before today, Noble had fallen 0.7 percent, compared with a 10 percent gain in Olam, and double-digit growth of Japanese trading houses including Marubeni Corp., Itochu Corp., and Sumitomo Corp.

“Noble didn’t show great profit growth despite all the commodity price increases” in the first part of last year, said James Koh, an analyst with brokerage Kim Eng Holdings Ltd. “They are spending a lot of money building assets which are not quickly earnings accretive and their profits are also coming from a very high base due to the great 2005 to 2008.”


Returns on Noble’s acquisitions will become apparent in 18 months, Leiman said. The company is “committed” to keeping its investment grade credit rating and will evaluate asset purchases and borrowings with this in mind, Chief Financial Officer Robert Van Der Zalm said on the conference call.

Noble gained control of Gloucester Coal in Australia’s New South Wales state in 2009 and also owns Donaldson Coal, a miner operating in the same region. The supplier’s energy business accounted for 65 percent of revenue last year.

The unit’s earnings will grow in 2011 with help from newly acquired assets, such as Sempra Energy Solutions, a power and gas operator in the U.S., Van Der Zalm said. Rising energy and agricultural commodity prices are not tempering demand in emerging markets, Leiman said.

Noble will decide on paying dividends in “the next few months,” Leiman said.