Owners of Eurasian Resources Group (ERG) are considering splitting the mining group into two businesses — Kazakh and international. This was reported by Qazaqyia.kz citing Kursiv Media.
According to Bloomberg, a potential split could distribute ERG's assets between the company's two main private shareholders — Shakhmurat Mutalip and Shukhrat Ibragimov. The group currently generates most of its revenue from iron ore, ferrochrome, and aluminum production in Kazakhstan, but also owns assets in the African Copper Belt and Brazil.
Bloomberg notes that a possible split of ERG could remove uncertainty around the company's future and open up opportunities for both parts of the business to strike new deals with international partners. Interest from investors, trading companies, and governments in metal supplies is growing both in Kazakhstan and the Democratic Republic of Congo.
If the deal is completed, Mutalip could strengthen his influence over ERG's operations in Kazakhstan. Ibragimov, who currently serves as CEO and chairman of the company, would be able to focus on Congo's mining sector. In that country, ERG has operating and developing assets, including Metalkol — one of the world's largest sources of cobalt and a major copper supplier.
Mutalip's press secretary did not respond to Bloomberg's request for comment. A representative of ERG also could not immediately comment to the agency.
Under the proposal under consideration, Ibragimov's family could exchange its 20% stake in ERG for the international business, which is planned to be transferred to a new company. Bloomberg's interlocutors asked not to disclose their names because the discussions are private. In this case, Mutalip and the state would remain the owners of the mines and plants in Kazakhstan, agency sources said.
Mutalip, 35, acquired 39.3% of ERG in May. Bloomberg links this deal to the redistribution of capital in Kazakhstan and the emergence of a new elite after the January 2022 events. The government of Kazakhstan owns 40% of ERG.
Last month, Kudrat Shamiev, chairman of Mutalip's construction company Integra Construction, was appointed CEO of ERG's Kazakh business.
Mutalip bought his stake in ERG from the families of Patokh Shodiev and Alexander Mashkevich, who together with Shukhrat Ibragimov's father Alijan Ibragimov founded ERG's predecessor company. The group was formerly called Eurasian Natural Resources Corp. and was one of the largest mining companies listed on the London Stock Exchange.
In 2013, the founders took the company private amid an investigation by the UK's Serious Fraud Office into possible corruption violations. The investigation was dropped in 2023.
According to Bloomberg, about $2 billion of ERG's debt could be transferred to the new company that Ibragimov would control.
At the same time, his slimmed-down company would have to address serious problems ERG faced in Congo due to illegal mining on the group's concessions, especially at Metalkol and Boss Mining SAS.
The possible spin-off of the international business is also being discussed amid growing US involvement in Congo's mining sector. Washington seeks to reduce dependence on Beijing for a range of mineral products, while Chinese companies account for most of the copper and cobalt production in Congo.
Earlier, Kursiv reported that after buying a stake in ERG, Shakhmurat Mutalip joined the company's board of managers. Along with him, Nurlan Zhakupov, chairman of the board of the Samruk-Kazyna fund, also joined the board.