Kazakhstan Mining Giant ERG Could Be Split in Two — Bloomberg

The owners of Eurasian Resources Group (ERG) are considering splitting the company into two businesses — one comprising its Kazakhstan operations and the other its international assets, Orda.kz reports, citing Bloomberg.

If the deal goes through, ERG’s mines and plants in Kazakhstan would remain under the control of Shakhmurat Mutalip and the Kazakh state. Kazakhstan holds a 40% stake in the group, while 35-year-old Mutalip acquired a 39.3% stake in ERG in May from the families of Patokh Chodiev and Alexander Mashkevich.

Shukhrat Ibragimov, ERG’s current chairman, could take control of the company’s international operations. According to Bloomberg’s sources, his family would exchange its 20% stake in the group for foreign assets, which would be transferred to a new company. The new company would also assume approximately $2 billion in debt.

ERG generates most of its revenue in Kazakhstan from iron ore, ferrochrome and aluminium. However, the group also owns assets abroad, including in the African Copperbelt, Brazil and, most notably, the Democratic Republic of the Congo (DRC). In the DRC, ERG owns Metalkol, one of the world’s largest sources of cobalt and a major copper producer.

A split could remove uncertainty surrounding the group’s future and pave the way for both sides to pursue new deals with international partners. Investors, traders and governments are seeking to secure supplies of raw materials in advance,Bloomberg notes.

For Mutalip, such a split would consolidate his control over ERG’s Kazakhstan operations. Last month, the chairman of his construction company was appointed CEO of the group’s Kazakhstan division.

For Ibragimov, the deal would amount to a bet on the DRC. However, the assets would come with significant challenges. ERG has faced illegal mining on its concessions in the country, particularly at Metalkol and Boss Mining SAS.

The potential split of ERG comes amid growing US interest in the DRC’s mining sector. Washington is seeking to reduce its dependence on China for copper, cobalt and other critical minerals. Chinese companies currently control most of the country’s copper and cobalt production.

Original author: Ilya Astakhov

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