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Noble Group

Founded in Hong Kong in 1986, Noble Group manages a diversified portfolio of essential raw materials, integrating the sourcing, marketing, processing, financing, and transportation. It owns strategic assets such as coal and iron ore and grain crushing plants and infrastructure and sources from low-cost producers in Brazil, Australia and Indonesia, and supplies high-growth, high-demand markets in China, India and the Middle East.

 

BusinessCommodities

Richard Elman finds Noble Group successor

Richard Elman, the founder of commodities giant Noble Group finds the man who will lead the firm into a bold emerging market - the US

PUBLISHED : Saturday, 10 November, 2012, 12:00am
UPDATED : Saturday, 10 November, 2012, 5:04am

Richard Elman, who got his start as a scrap metals labourer before creating Asia's top commodities trader by revenue, surrounds himself with reminders of his hard-won success.

In his 18th-floor office in Hong Kong, the executive chairman of Noble Group keeps a photo of himself with former US president Bill Clinton, a lump of coal from Australia and two abstract paintings by Chinese artists.

The billionaire attributes part of his good fortune to the amber bead bracelet that he fiddles with on his wrist. He has worn it for more than 10 years after someone told him it kept bad energy out and good energy in.

"I am afraid to take it off," says Elman, a Briton, with a smile. "Sometimes, you gotta be lucky."

Elman, 72, founded Noble in 1986 and today presides over a commodities powerhouse with annual revenue of US$80.7 billion. That makes Noble as big as Illinois-based Archer Daniels Midland, the world's No 1 grain processor, and almost half the size of Glencore International, the biggest publicly traded commodities supplier, which has its headquarters in Switzerland.

Noble's meteoric rise has been fuelled by the decade-long commodities boom, a product of surging demand in emerging markets. It has roughly doubled in size every two years since 2001 by buying coal, soya beans and other commodities in countries such as Australia, Brazil and Indonesia and selling them to China, India and the Middle East.

"People in the trading business have a lot of respect for Richard Elman for what he has built," says Vijay Iyengar, chairman of Agrocorp International, a commodities trader in Singapore. "They are aggressive. And they know what they are doing."

Now, after amassing a fortune estimated at US$1.7 billion, Elman faces some of the most daunting challenges in his long career. The torrid expansion in China and other developing nations has fizzled. After growing at an annual average of 10.4 per cent from 2001 to last year, the mainland economy expanded 7.4 per cent in the third quarter, the seventh consecutive quarterly deceleration.

In November last year, Noble announced its first quarterly loss in 14 years, partly due to cotton trades that went wrong. The company's stock dropped 27 per cent the following day to S$1.18 (HK$7.28) on the Singapore exchange.

Elman also has had to cope with cooling markets at a time of management turmoil within Noble over choosing his successor. He is now rushing into the United States market, which he considers a hot spot for commodities investors. He says America has cheap land, a sophisticated labour force and a good banking system.

"We deal with emerging markets, and we think that one of the fastest-emerging markets is the United States," Elman says.

Since 2008, Noble has spent more than US$781.2 million there, investing in gas pipeline firms and storage facilities.

His favourite stories are those about the virtues of dogged persistence. Tata Steel, the largest Indian steelmaker, refused to work with Noble when it was a start-up, Elman says, until he persuaded its executives to accompany him to China to be introduced to customers who would buy chrome ore from Tata. The steelmaker became one of Noble's first big clients.

A few years after Noble was set up, Elman had to dip into his personal savings of US$150,000 to pay the company's bills. Today, he still demands his employees immediately pick up a ringing phone, even if it's not their own.

Elman is dealing with what he calls the most difficult decision in the world, and that is who will take over after him.

He has worn out two executives since 2010 in his quest for a leader for a company in which his family is the biggest shareholder, with a 22 per cent stake. In naming Tobias Brown as a successor, Elman displayed his typically candid style of communicating in a July 2010 statement.

"We can fight like two dogs in an alley, but when the dust settles and the yelling stops, we are both better for it," Elman wrote.

Brown resigned as executive chairman after two months on the job in November, saying that having both him and chief executive Ricardo Leiman running Noble was not working. Then Leiman resigned in November last year when the company announced its loss.

Elman says he has finally found his man. In April, he hired as chief executive Bahrain-born Yusuf Alireza, 42, who was co-president of Goldman Sachs' Asia unit excluding Japan.

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