by winston » Thu Nov 11, 2010 2:48 pm
Not vested
INTERVIEW-Singapore's GMG Global sees rubber output growing By Charmian Kok
SINGAPORE, Nov 11 (Reuters) - Singapore-listed rubber firm GMG Global aims to grow its annual output of rubber by at least mid-single digit percentages for the three years after 2012 in order to meet the rising demand for the commodity from emerging markets like China and India.
GMG Global, which is 51-percent owned by China's state firm Sinochem International <600500.SS>, expects its annual production to increase to 150,000 tonnes a year by 2012, up from 100,000 tonnes this year.
"The growth in certain. For the next three years (after 2012), we expect to see at least higher single-digit growth," Chief Executive Officer Xian Ming told Reuters in an interview.
Shares of GMG Global surged 9.5 percent to S$0.345 on Thursday after Shanghai rubber futures hit a record peak on supply concerns.
Asian physical rubber prices have also touched record highs recently, as severe flooding in Thailand has damaged rubber output and caused shipment delays. [ID:nSGE6A9043] This comes at a time when rubber supply is already low because of seasonal rain in Thailand and Malaysia, which disrupts tapping.
"In the very short term, there are some supply issues because of the weather and some countries will enter the winter period at the beginning of next year so yields will be lower," said Xian.
However, he added that he expects the tight supply to ease in a few years, helped by new rubber planting in countries like Vietnam and Laos.
GMG has benefitted from the surge in natural rubber prices, and reported a net profit of S$32.2 million for the nine months ended Sept 30, reversing a loss of S$270,165 a year earlier.
To increase GMG Global's rubber tonnage, the company is looking to acquire Southeast Asian firms that own processing plants, as well as to secure more land concessions in Africa, Xian said.
Currently, GMG has two processing plants in Kalimantan, Indonesia, and plantations in Cameroon and Ivory Coast with 42,560 hectares of land concessions.
It expects to add 800 to 1000 hectares of rubber plantation next year, and 2,000 additional hectares each year thereafter, as it recently set up a joint venture firm in Cameroon which will help it to secure more land concessions in the country.
Demand for natural rubber, which is used mainly in tyres of commercial vehicles, is expected to surge in the coming years with the economic boom of emerging markets like China and India.
"Automobile demand is increasing. For developing countries, they are doing more construction and infrastructure projects, so demand for tyres will increase," Xian said.
Source: Reuters
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