Noble hunts for new CEO after huge carbon credit loss - Point

Fri Nov 11, 2011 1:57pm GMT

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LONDON - Commodity trader Noble Group is looking for a new chief executive after a write-down of its U.N.-offset portfolio plunged the company into its first quarterly loss for over a decade.

Noble, one of the world's biggest commodities traders, saw its chief executive Ricardo Leiman quit on Thursday after the company said it made a loss of $17 million (10 million pounds) in the third quarter.

This reversed a $157 million profit in the same period in 2010 as the company incurred losses on its portfolio of U.N-backed carbon credits and cotton trading book.

"The recent dramatic decline in the price of short-dated CERs (Certified Emissions Reductions) - a maturity that we cannot hedge against - has meant that further write downs are being made," Noble's chairman Richard Elman said in a statement.

The firm did not specify how much it had lost on its CER portfolio, but an analyst note from Merrill Lynch on Thursday estimated it to be in the realm of $80-100 million.

"Insufficient liquidity for hedging led Noble to incur significant unrealized mark-to-market losses," said the report, authored by Jeffrey Ng of Merrill's Singapore office.

Shares in Hong-Kong-listed Noble Group ended at 1.18 singapore dollars ($0.93) on Friday, down 25 percent for the week.

Noble had to revalue its credits in the face of plummeting CER prices, which averaged 9 euros during the third quarter, down 20 percent from the start of 2011.

Prices have since fallen further, with the front-year ICE ECX contract trading to an all time low of 6.35 euros ($8.63)on November 3 before climbing back to around 6.85 euros by midday on Friday.

Fears about oversupply in the EU Emissions Trading Scheme, increased credit issuances by the U.N. and uncertainty about how offsets can be used after 2012 have caused CERs to become the world's worst-performing commodity so far this year.

Noble is listed a participant in 80 CDM projects, including those using biomass, hydro and wind power, energy efficiency, methane capture and schemes that destroy industrial gas HFC-23.

Weak CER prices have caused problems for other companies in the carbon market, as last month Trading Emissions, a UK carbon investment fund, was forced to cancel its dividend payments and replace members of its board.

(Reporting By John McGarrity)

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