Elman may buy two Indonesian coal mines<\/p>\n
Bernard Lo and Jason Gale, Bloomberg\/Singapore<\/p>\n
Noble Group Ltd. may buy coal mines in Indonesia, Chief Executive
\nRichard Elman said, expanding in a nation that is the second-
\nbiggest exporter of the fuel to Chinese power generators.<\/p>\n
Elman, 65, armed with US$641 million of cash as of June 30,
\nplans to accelerate Noble's investment in the Southeast Asian
\ncountry to add to stakes the Hong-Kong based commodities supplier
\nowns in mines in Kalimantan, on the island of Borneo.<\/p>\n
Elman's plan is a demonstration of confidence in Indonesia,
\nwhere the government is trying to stem a flow of capital that
\ncaused the rupiah to slump 7.7 percent against the dollar this
\nyear. The currency drop was triggered by a surge in global energy
\nprices, which have boosted the government's fuel subsidy bill and
\nincreased demand for dollars.<\/p>\n
"We have always had huge confidence in Indonesia," Elman said
\non Tuesday in an interview from Hong Kong. "We have always
\nbelieved in Indonesia as an economy and as a resource provider to
\nthe world. Nothing has changed. In fact, we are going to
\naccelerate our interest there."<\/p>\n
Shares of Noble rose 1 cent, or 0.7 percent, to S$1.44 on the
\nSingapore Exchange at 11:30 a.m. local time. The stock has gained
\n9.2 percent this year, less than the 12 percent increase in the
\nbenchmark Straits Times Index. Over the past five years, Noble
\nshares have soared 1,683 percent, outperforming the index's 49
\nother members.<\/p>\n
"Noble wants to grow the business's top line by 20 or 30
\npercent," said Anthony Darwell, a Singapore-based equities
\nanalyst with Nomura Securities, who has a "buy" rating on the
\nstock. "To do that, they need to secure supply, with one means
\nbeing to acquire assets."<\/p>\n
Noble has "plenty of capital to buy" assets, Darwell said.
\nRising prices for coal mines may make it difficult for the
\ncompany to find acquisitions that exceed the targeted 20 percent
\nreturn on equity, he said.<\/p>\n
Coal prices have risen to records, bolstered by demand from
\nChina, where the economy expanded 9.5 percent in the second
\nquarter, causing electricity consumption to surge. Last year
\nChina accounted for 28 percent of Noble's $8.62 billion in group
\nsales. The company's energy unit, which includes coal, reported a
\n76 percent increase in sales to $2.54 billion last year.<\/p>\n
Buying mines that supply thermal coal would mark a new step
\nfor the company, which has previously bought stakes in mines to
\nguarantee production for its coal-supply business.<\/p>\n
"In the future, we will look to owning" one or two mines,
\nElman said, adding that the company is "not going to put hundreds
\nof millions of dollars" into any coal acquisition.<\/p>\n
Indonesian coal miners plan to boost output by 9.7 percent
\nnext year to 170 million metric tons to meet overseas demand,
\nJeffrey Mulyono, chairman of the Indonesian Coal Mining
\nAssociation, said last month. About 70 percent of the production
\nis expected to be exported, he said.<\/p>\n
Noble, which supplied 10 percent of China's iron ore imports
\nlast year, is adding new businesses to grab a larger share of
\ntrade in raw materials. Elman's also considering processing
\nnuclear fuel after starting fertilizer, carbon emission credit
\ntrading and ethanol businesses this year.<\/p>\n
Last week, it said a $500 million loan facility was arranged
\nby a group of 34 lenders. That followed the sale in March of $700
\nmillion of U.S. dollar-denominated bonds.<\/p>\n
"Are we looking for a major investment opportunity?
\nAbsolutely," said Elman, whose acquisitions the past four years
\ninclude shipping, cocoa, coal and grain assets. "There are
\nnumerous things that we are looking at."<\/p>\n
He said the company might be close to finding a target in
\nuranium-processing.<\/p>\n
"Nuclear is not a dirty word anymore. It's definitely 'green
\nand clean' and we believe that it's the cheapest form of energy."<\/p>\n
Oil prices, which have soared 46 percent this year, are
\n"starting to take a bite," increasing inflation and sapping
\ndemand for commodities, Elman said. Noble is still "seeing very
\nstrong demand" for the commodities it supplies, which include
\niron ore, coffee and petrochemicals, he said.<\/p>",
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