Noble Group's $500m investment in X2 Resources seen as long-term bet

Benefits will take time to flow in.

Noble Group (Noble) has announced that it has agreed to invest in a newly established private mining venture – X2 Resources – where Noble, X2, TPG will each put in US$500m, the benefits of which according to research firm OCBC will not be felt in the near term.

"While we do see benefits from the investment, we note that most will need some time to flow through i.e. more medium to long term in nature. But for now, we believe that headwinds could continue to come from the sluggish economy in China," said OCBC.

"We further expect its Agriculture segment to remain a drag on its overall profitability. Separately, the potential shutdown in Washington could also weigh on sentiment," it added.

OCBC noted that under the agreement, Noble will be X2 Resources’ preferred marketer and provider of supply chain management (SCM) and logistics services, which is in line with its strategy to focus on its core competence as a supply chain manager.