Singapore’s Wilmar International, the world’s No.1 listed palm oil firm, is on the prowl for assets as far afield as Brazil in its quest to dominate the world in another commodity — sugar.

Wilmar has already notched up one high-profile acquisition with its purhcase of Sucrogen, the world’s No. 5 sugar refiner, from Australian conglomerate CSR for US$1.5 billion ($2 bilion), the largest deal so far this year in the global sugar industry.

It also owns greenfield sugar plantations in Indonesia likely to produce more than 1.5 million tonnes of raw sugar when fully developed in 3-4 years, DBS Securities estimates, adding to the 2.1 million tonnes that Sucrogen produces currently.

But for Wilmar, the mother lode is Brazil, the world’s largest sugar producer.

“My view is that they will get into Brazil sooner rather than later,” said Singapore-based UBS analyst Andreas Bokkenheuser of Wilmar. “Sugar is now the top priority and they have commited sizeable capital expenditure for this new phase of growth.”

Wilmar is sitting on more than US$6 billion worth of cash and bank deposits, which it can use to help fund future acquisitions and has also mandated three banks to help raise US$1.1 billion in loans to finance the Sucrogen acquisitions.

Its foray into sugar comes at a time when its profit margins in palm oil have been squeezed by rising raw material prices and Indonesia’s plans to impose a two-year moratorium on new permits to clear forest for oil palm cultivation from 2011.

Palm oil makes up around half of Wilmar’s pre-tax profit.

The company has said that, on proforma basis, Sucrogen would contribute around 2% of its net profit.

Wilmar chief executive Kuok Khoon Hong, ranked No. 4 in Forbes 2010 Singapore’s rich list with a net worth of US$3.5 billion, had said the sugar investment was necessary to sustain Wilmar’s growth although it might result in lower margins over the next two years.

“The reason we are where we are today is because we always invest heavily for the future,” Kuok told reporters recently. “If you always think about the short term you never grow in the mid term.”

Wilmar said Sucrogen would add nearly 2% to its net profit, but some analysts expect the contribution would grow significantly after the company completes the development of the 200,000 hectares sugar plantation in Papua.

Bankers are already pitching to advise Wilmar on possible deals in Brazil, a foreign investment banker in Brazil told Reuters, adding “the investment community got interested” when they heard about Wilmar’s interest.

“Brazil is the sugar trading centre. If we go there we will be able to influence world trade and price. So if you want to be a long-term sugar player, you have to go to Brazil,” said a source close to Wilmar’s Kuo but declined to be named because of the sensitivity of the topic.

The investment banker, who declined to be named as he was not authorised to speak to the media, said if Wilmar were serious, “they could have a pick of the many debt-laden mills in Brazil for a start. Land for sugar plantations is there and other companies have also expressed interest, especially from India”.

Analysts said Wilmar could pick from hundreds of privately owned and heavily indebted sugar producers in Brazil, pitting it against top firms such as Cosan SA, or Sao Martinho SA.

Wilmar’s Kuok had said Australian sugar assets were more valuable to his firm, compared with Brazilian assets, due to their proximity to Asia, its main market.

Wilmar, which generates nearly half of its sales and gross earnings from China and is the second-largest branded cooking oil producer in Indonesia, is hoping to use its knowledge and distribution network in Asia for the sugar business.