Company:Eurasian Natural Resources Corporation

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Eurasian Natural Resources Corporation PLC
TypePrivately held company (1994–2007)[1]
Public limited company (2007–2013)
Subsidiary (2013–present)
IndustryMetals and Mining
FateTaken private as Eurasian Resources Group in 2013
Founded1994 (in its current form from 2006)
HeadquartersLondon, United Kingdom
ProductsFerrochrome
Ferroalloys
Iron Ore
Alumina
Aluminium
Coal
Power Generation
Copper
Cobalt
RevenueUS$6,320 million (2012)[ENRC 1]
US$ (374) million (2012)[ENRC 1]
US$ (852) million (2012)[ENRC 1]
Number of employees
Over 72,000 (2011)[ENRC 2]
Websitewww.enrc.com

Eurasian Natural Resources Corporation PLC (ENRC) was a public, Kazakhstan/Central African-focused,[2] multinational leading diversified natural resources company headquartered in London, United Kingdom. It had activities in integrated mining, processing, energy, logistics and marketing.

ENRC was formed in 1994,[ENRC 3] listed on the London Stock Exchange in 2006 delisted after a near six-year spell in November 2013. A secondary listing and subsequent de-listing also took place on the Kazakhstan Stock Exchange.

ENRC is now a fully owned subsidiary of the Eurasian Resources Group (ERG), a private natural resources company headquartered in Luxembourg. This private company incorporates the assets of former FTSE-100 group, ENRC PLC, which it acquired in November 2013.

History

Major events

The assets of the company were acquired during the mid-1990s as part of the privatization process in Kazakhstan.[3]

The company in its present form was established in 2006 as part of a re-organisation to consolidate a series of businesses into one group.[ENRC 4] In its regulatory report ENRC claimed revenues of US$3,256 million for the year ended 31 December 2006 and US$1,856 million for the six months ended 30 June 2007. By then ENRC was "the world's sixth-largest iron ore exporter by volume and world's fifth-largest supplier of traded alumina by volume.

The company floated around 18% of its equity on the London Stock Exchange in December 2007.[4]

In December 2009 the Company completed acquisition of the Central African Mining Exploration Company (CAMEC).[5] CAMEC's operations incorporate the assets of copper and cobalt in the Democratic Republic of Congo, the development projects of coal in Mozambique, bauxite in Mali, platinum in Zimbabwe, and fluorspar in South Africa, as well as trucking and logistics business across the African continent.[ENRC 5] CAMEC's Mukondo Mine may be the richest cobalt reserve in the world. Copper from Mukondo is refined at the Luita plant, with planned capacity of 100,000 tonnes per year of copper cathode.[6] In July 2009 CAMEC announced a long term agreement under which CAMEC would deliver its entire annual production of cobalt in concentrate from Mukondo Mountain to Zhejiang Galico Cobalt & Nickel Materials of China.[7]

In February 2010 ENRC acquired a 90% interest in Chambishi Metals PLC,[8] a smelting facility in Zambia, together with a 100% interest in Comit Resources FZE,[9] a Dubai-based marketing and sales company that historically has handled Chambishi's copper and cobalt sales. In August 2010 company acquired 50.5% of Camrose Resources Limited ('Camrose'). Camrose held five high quality copper and cobalt mining permits in the Democratic Republic of Congo (DRC).[ENRC 5] They include the Kolwezi tailings project, which the DRC government had confiscated from First Quantum Minerals (FQM). FQM had spent C$750 million developing the Kolwezi assets. ENRC paid $175 million for its majority stake in Camrose.[10]

In September 2010 ENRC acquired the outstanding 50% interest in Bahia Minerals BV and in October 2010 – 100% of Mineração Minas Bahia SA (MIBA) and 51% of Mineração Peixe Bravo SA (MPB).[11]

In March 2013 ENRC was forced to write down a US$1.5bn (£1bn) loss due largely to an "onerous" locked in contract with the Russian aluminium company, Rusal with whom they must provide aluminium at what is now below market price (Telegraph 2013).[12]

On 21 April 2013, The Sunday Times revealed that three founders, Alexander Mashkevitch, Patokh Chodiev and Alijan Ibragimov, were behind a possible takeover bid for ENRC. [13] Following this news, three senior executives resigned, and a fourth announced a leave of absence. These included the Head of Human Resources and the Company Secretary.[14] On 23 April Mehmet Dalman, the chairman of ENRC, also resigned and next day the group confirmed that Gerhard Ammann, a non-executive director of ENRC and president of Bank Von Roll, a Swiss private bank, would replace Mr Dalman.[15]

The Serious Fraud Office launched a criminal investigation into ENRC's business practices in April 2013.[16]

ENRC annual report released on 30 April said that UK authorities are investigating whether ENRC breached Britain's rules for listed companies, specifically with acquisitions made in the Democratic Republic of Congo and a 2012 sale of railway line repair company Zhol Zhondeushi to a company connected to the family of one of the miner's co-founders.[17]

In November 2013 ENRC de-listed from the LSE after the group's founders gained acceptances from 96.7 percent of shareholders for their offer - of $2.65 in cash and 0.23 of a Kazakhmys share for each one in ENRC - to acquire the company along with the Kazakh government.[18]

In February 2014, it was reported that the firm would have to sell its international assets, including its lucrative copper mines in the Democratic Republic of Congo, after the company's founders came under increased pressure to repay the large loan they had taken out to privatise ENRC.[19]

Operations

ENRC operates in Kazakhstan, China, Russia, Brazil and Africa (the Democratic Republic of Congo, Zambia, Mozambique and South Africa).[ENRC 2] The group incorporates six Divisions (ENRC 2013): Ferroalloys, Iron Ore, Alumina and Aluminium, Energy, Other Non-ferrous, Logistics [ENRC 6]

Ferroalloys

ENRC's largest division is its Ferroalloys Division (ENRC 2013).[ENRC 7] ENRC is one of the world's largest ferrochrome producers (ENRC 2013).[ENRC 7] ENRC's Kazchrome (de) in the Republic of Kazakhstan, integrates four operating companies: Donskoy Ore Mining & Processing Plant, Aktobe Ferroalloys Plant, Aksu Ferroalloys Plant and Kazmarganets Mining Enterprise.[ENRC 7] ENRC's Zhairem GOK, one of the "largest manganese ore mining and processing plants" in Kazakhstan, is a "major supplier of manganese and ferromanganese concentrates to customers throughout Russia, Ukraine, Central Asia and China (ENRC 2013)."[ENRC 7]

Energy

The ENRC is one of the largest electricity providers in Kazakhstan, accounting for approximately 16.3% of the country's recorded electricity production in 2011.[20]

ENRC operations in the Republic of Kazakhstan

The ENRC's assets in the Republic of Kazakhstan comprise Kazchrome, Zhairem GOK, SSGPO, Aluminium of Kazakhstan, Kazakhstan Aluminium Smelter (KAS)[ENRC 6][ENRC 7]

ENRC is one of the world's largest ferrochrome producers (ENRC 2013).[ENRC 7] ENRC's Kazchrome in the Republic of Kazakhstan, integrates four operating companies: Donskoy Ore Mining & Processing Plant, Aktobe Ferroalloys Plant, Aksu Ferroalloys Plant and Kazmarganets Mining Enterprise.[ENRC 7]

Contributing significantly to Kazakhstan's GDP, one of the world's significant exporters of iron ore; the world's ninth largest producer of traded alumina; and one of the largest electricity providers in Kazakhstan.[ENRC 8]

ENRC is one of Kazakhstan's largest companies, accounting for approximately 3% of Kazakhstan's GDP in 2009. ENRC currently employs over 70,000 people, of which 65,000 are located in Kazakhstan.[ENRC 2]

ENRC acquisition of Central African Mining Exploration Company (CAMEC)

In December 2009 ENRC acquired 95.40% of the shares of Central African Mining Exploration Company (CAMEC)[5] CAMEC's operations incorporate the assets of copper and cobalt in the Democratic Republic of Congo, the development projects of coal in Mozambique, bauxite in Mali, platinum in Zimbabwe, and fluorspar in South Africa, as well as trucking and logistics business across the African continent.[ENRC 5] ENRC had made a £584-million cash offer in September 2008 (Webb 18 September 2009).[21] The chairperson Phillippe Edmonds and CEO Andrew Groves both resigned when the deal was closed in November 2009.[22]

CAMEC's Mukondo Mine may be the richest cobalt reserve in the world. Copper from Mukondo is refined at the Luita plant, with planned capacity of 100,000 tonnes per year of copper cathode.[6] In July 2009 CAMEC announced a long term agreement under which CAMEC would deliver its entire annual production of cobalt in concentrate from Mukondo Mountain to Zhejiang Galico Cobalt & Nickel Materials of China.[7]

ENRC acquisition of Camrose Resources Limited

ENRC's acquisition 50.5% of Kolwezi Mine Tailings (KWT) a "multi-billion dollar copper and cobalt tailings reprocessing facility"[23] that had been expropriated in 2009 by the DRC from Vancouver, Canada-based First Quantum Minerals through Dan Gertler's newly formed British Virgin Island-based company, Highwinds, was the last of a series of ENRC of Congolese mining asset acquisitions in roughly an 11-month period.[24][self-published source] First Quantum Minerals had completed 75 per cent of the construction and the lucrative facility was almost ready to be operational when it was seized by the government and handed to[23] This led to First Quantum Minerals v Highwinds and others, a case concerning the expropriation of mining licences in the Democratic Republic of Congo. DRC passed the concession to a new joint venture Metalkol Sarl, encompassing state-owned Gecamines (30%) and Dan Gertler's newly formed British Virgin Island-based company, Highwinds (70%).[23][25]

Camrose Resources Limited ('Camrose') "owned British Virgin Island-based new company, Highwind Group which had a 70% interest in the Metalkol Sarl, which in turn owned the exploitation licence for the Kolwezi tailings site (Law Expert 2 March 2012)."[23] Camrose's other assets included a "64% stake in Canada listed Africo Resources which held a 75% interest in Kalukundi exploitation licence as well as 56% indirect interest in Comide Sprl, which held the exploitation licence for Mashitu, Pangalume and Kii tenements."[23]

The Kolwezi tailings project, is a lucrative copper- and cobalt-extractions projects mining older mines' tailings ponds, partly owned and operated by First Quantum Minerals, a Vancouver, British Columbia based mining and metals company, until its forced closure in September 2009 when the DRC government revoked its license and confiscated the holdings.[10][26][27][28] First Quantum spent $750 million on acquiring and developing the property. First Quantum took out an action against the DRC government in the International Chamber of Commerce Court of Arbitration.[29]

Fasken Martineau, a leading international business law and litigation firm recovered an almost unprecedented US$1.25B in the dispute between First Quantum Minerals and the DRC. As part of the settlement Eurasian Natural Resources Corporation (ENRC) purchased First Quantum's residual claims and assets in the DRC.[23]

In August 2010 ENRC acquired 50.5% of Camrose Resources Limited ('Camrose'), which at that time held a 70% indirect interest in Metalkol Sarl, owner of the Kolwezi copper tailings project.[ENRC 5] In 2010 ENRC paid $175 million for its majority stake in Camrose.[10] On 28 December 2012, 99 percent of Eurasian Natural Resources Corp shareholders approved the US$550 million purchase of the remaining 49.5% per cent of Camrose Resources Limited still held by Dan Gertler's Gibraltar-registered (Wild et al. 2013 page 68)[30] Fleurette Properties Ltd.[31]

ENRC operations in Zambia

In February 2010 ENRC purchased a 90% interest in Chambishi Metals PLC, a copper and cobalt producer and smelter located in Zambia.[8][9][ENRC 2]

ENRC operations in Russia

On 4 April 2008 Eurasian Natural Resources Corporation PLC finalized the purchase, first signed on 4 December 2007, of the controlling interest in Serov Ferrochrome Producer (Serov SPA) in Sverdlovsk region, eastern Russia for US$210 million from various entities affiliated with Mr. P Chodiev, Mr. An Ibragimov and Mr. A Machkevitch, founding shareholders in ENRC. Sir David Cooksey, the Non-Executive Chairman of ENRC noted this was ENRC's first transaction outside of Kazakhstan. The purchase agreement (4 December 2007) gives ENRC the economic benefit from all dividends and distributions made after 4 December 2007. The acquisition will provide a strong platform for ENRC in Russia. The purchase provided vertical integration with companies that ENRC operates: Serov Ferrochrome Factory, Saranovskaya Mine Rudnaya and Serov Metalconcentrate Works. Dr. Johannes Sittard, Chief Executive Officer of ENRC, described how the purchase of Serov gave ENRC an asset base and strong platform in Russia.[ENRC 9]

Corporate affairs

In April 2008 the Founder Shareholders of Eurasian Natural Resources Corporation Group "ultimately indirectly owned equally" Industrial Metals Technology Limited, Chesswood Holdings Limited, Blackmore Holdings Limited, Prentice Holdings Limited, Cretown Corporate Advisory BV, International Mineral Resources BV ('IMR') Serov Ferrochrome Producer (Serov SPA).[ENRC 9] Mr. P Chodiev, Mr. An Ibragimov and Mr. A Machkevitch were Founder Shareholders of Eurasian Natural Resources Corporation Group. Johannes Sittard, was the Chief Executive Officer of ENRC and Sir David Cooksey was the Non-Executive Chairman of ENRC.[ENRC 9]

Senior management

ENRC's senior management team consisted of:[ENRC 10]

Mr Mehmet Dalman Chairman and non-executive director
Mr Felix Vulis Chief Executive Officer
Ms Zaure Zaurbekova Chief Financial Officer
Mr Jim Cochrane Chief Commercial Officer, Head of Sales & Marketing and Logistics
Mr Beat Ehrensberger General Counsel
Mrs Victoria Penrice Company Secretary
Ms Mounissa Chodieva Head of Investor & Public Relations

Upon the acquisition by ERG, many of the previous senior management did not transfer to the new group, left their positions or were replaced in a new structure.

Ownership

ENRC is now owned fully by ERG (Eurasian Resources Group), a private company headquartered in Luxembourg, Grand Duchy of Luxembourg.

This follows the Group's significant restructuring as a result of the transaction at the end of 2013 to buyout the assets of ENRC to ERG. In 2014, a new management team was appointed.

Dr Alexander Machkevitch is Chairman of the Board of Directors and Mr Benedikt Sobotka is Chief Executive Officer. The ERG is 40% owned by the Kazakhstan government.[32]

See also

  • Camrose Resources Limited
  • Central African Mining and Exploration Company
  • Ferroalloys
  • Katanga Plateau
  • Mining in the Democratic Republic of the Congo
  • Mukondo Mine

Notes

ENRC Publications

  1. ↑ 1.0 1.1 1.2 Preliminary Results 2012[yes|permanent dead link|dead link}}]
  2. ↑ 2.0 2.1 2.2 2.3 "Key facts". ENRC. http://www.enrc.com/en-GB/About-Us/At-a-Glance/. 
  3. ↑ Group Overview (Report). ENRC. 2013. http://www.enrc.com/investors/group-overview. 
  4. ↑ "ENRC Prospectus: PricewaterhouseCoopers LLP report 2006-June 2007 Eurasian Natural Resources Corporation PLC, 16 St James's Street, London and Deutsche Bank AG, London Branch". 2007. http://enrc.g3dbuild.com/sites/enrc.g3dbuild.com/files/prospectus/ENRC_Prospectus_FINAL_Part_6.pdf. 
  5. ↑ 5.0 5.1 5.2 5.3 "ENRC history". Enrc.com. http://www.enrc.com/en-GB/About-Us/Our-History/. 
  6. ↑ 6.0 6.1 "ENRC Divisions". ENRC. http://www.enrc.com/our-divisions. 
  7. ↑ 7.0 7.1 7.2 7.3 7.4 7.5 7.6 "ENRC Divisions: Ferroalloys". ENRC. http://www.enrc.com/our-divisions/ferroalloys. 
  8. ↑ "ENRC Group Overview". Enrc.com. http://www.enrc.com/en-GB/About-Us/Group-Overview/. 
  9. ↑ 9.0 9.1 9.2 "ENRC Regulatory News". Russia: ENRC. 4 April 2008. http://www.enrc.com/ru/regulatory_news_article/1674. 
  10. ↑ "ENRC - The Board of Directors". Enrc.com. http://www.enrc.com/en-GB/About-Us/Management1/Management/. 

References

  1. ↑ "Kazakh ENRC IPO fully subscribed, books close Dec 6". 2007-11-30. https://www.reuters.com/article/enrc-ipo-idINL303020820071130. 
  2. ↑ "ENRC Swings To Net Loss After $1.54 Billion Charge". 20 March 2013. http://www.euroinvestor.com/news/2013/03/20/base-metals-highlights-top-stories-of-the-day/12257402. 
  3. ↑ Polya Lesova (13 November 2007). "Kazakhstans Eurasian Natural Resources to list on LSE". MarketWatch. http://www.marketwatch.com/story/kazakhstans-eurasian-natural-resources-to-list-on-lse. 
  4. ↑ "Miner Eurasian Natural Resources to list on LSE". MarketWatch. 13 November 2007. http://www.marketwatch.com/news/story/kazakhstans-eurasian-natural-resources-list/story.aspx?guid=%7B07AF9E25-9B96-45E4-9694-DD5965BCF94C%7D. 
  5. ↑ 5.0 5.1 "ENRC Africa offer for CAMEC has 93.55% acceptance". Ibtimes.co.uk. 8 December 2009. http://www.ibtimes.co.uk/articles/20091208/enrc-africa-offer-for-camec-has-93-55-acceptance.htm. 
  6. ↑ 6.0 6.1 "CAMEC - The Cobalt Champion". International Mining. July 2008. http://www.infomine.com/publications/docs/InternationalMining/Chadwick2008t.pdf. 
  7. ↑ 7.0 7.1 Amy Witherden (6 July 2009). "Daily podcast - July 6, 2009". Mining weekly. http://www.miningweekly.com/article/daily-podcast---july-6-2009-2009-07-06-2. 
  8. ↑ 8.0 8.1 "ENRC buys 90% of Zambian copper and cobalt producer Chambishi Metals". Financial Times. 20 February 2010. http://news.reportlinker.com/n02024772/ENRC-buys-90-of-Zambian-copper-and-cobalt-producer-Chambishi-Metals.html. 
  9. ↑ 9.0 9.1 "ENRC buys central African smelter". Free-kaz.org. http://www.free-kaz.org/en/articles/213/enrc-buys-central-african-smelter. 
  10. ↑ 10.0 10.1 10.2 Loni Prinsloo (9 September 2010). "ENRC defends DRC acquisition, hits back at First Quantum". http://www.miningweekly.com/article/enrc-defends-drc-acquisition-slams-first-quantum-2010-09-09. 
  11. ↑ "Mining Journal – ENRC acquisitions". http://www.mining-journal.com/finance/enrc-acquisitions. 
  12. ↑ Emma Rowley (21 March 2013). "ENRC dragged to loss by £1bn of write-downs". UK: The Daily Telegraph. https://www.telegraph.co.uk/finance/newsbysector/industry/mining/9945089/ENRC-dragged-to-loss-by-1bn-of-write-downs.html. 
  13. ↑ Danny Fortson. "Tycoons plot to grab ENRC on the cheap". The Sunday Times. http://www.thesundaytimes.co.uk/sto/business/Industry/article1248609.ece?CMP=OTH-gnws-standard-2013_04_20. 
  14. ↑ Guthrie, Jonathan (2013-04-18). "Three more executives leave ENRC". FT.com. http://www.ft.com/cms/s/0/c9995f16-aaa7-11e2-9a38-00144feabdc0.html#axzz2RAz1361I. 
  15. ↑ ENRC chairman quits besmirched miner Financial Times, 24 April
  16. ↑ Simon Goodley; Mark Hollingsworth; Rupert Neate (25 April 2013). "ENRC: Serious Fraud Office launches criminal investigation". UK: The Guardian. https://www.theguardian.com/business/2013/apr/25/serious-fraud-office-enrc-documents. 
  17. ↑ ENRC warns shareholders of more questions on Congo Reuters, 30 April 2013
  18. ↑ ENRC Founders Plan 25 Nov. Delisting as 96.7% Accept Bid Bloomberg, 25 October 2013
  19. ↑ ENRC could sell precious DRC mines to repay costly debt, International: Reuters, 2014, https://www.reuters.com/article/us-enrc-sale-idUSBREA120B320140203 
  20. ↑ ENRC: About us
  21. ↑ Mariaan Webb (18 September 2009). "ENRC to make £584m offer for Camec". Mining Weekly. http://www.miningweekly.com/article/enrc-to-make-584m-offer-for-camec-2009-09-18. 
  22. ↑ "Edmonds, Groves resign from Camec board after ENRC takeover". Mining Weekly. 11 November 2009. http://www.miningweekly.com/article/edmonds-groves-resign-from-camec-board-after-enrc-takeover-2009-11-11. 
  23. ↑ 23.0 23.1 23.2 23.3 23.4 23.5 "Fasken Martineau advises First Quantum Minerals on US$1.25B deal". Law Expert Blog. 2 March 2012. http://lexpertblog.com/2012/04/05/fasken-martineau-advises-first-quantum-minerals-on-us1-25b-deal. 
  24. ↑ DRC Report (Report). Congo Leaks. November 2011. http://congoleaks.blogspot.ca/2011/11/initial-drc-report.html. Retrieved 23 March 2013. 
  25. ↑ Frik Els (22 August 2012). "Meet the Israeli middleman said to have 'stripped and flipped' First Quantum's DRC mine". Mining: Your Source of Global Mining News. http://www.mining.com/meet-the-israeli-middleman-said-to-have-stripped-and-flipped-first-quantums-drc-mine-76979/. 
  26. ↑ "Kingamyambo Musonoi Tailings SARL". International Finance Corp. http://www.ifc.org/ifcext/spiwebsite1.nsf/f451ebbe34a9a8ca85256a550073ff10/49f16fb4c528c963852576ba000e2d57?OpenDocument. 
  27. ↑ Tim Webb (6 September 2010). "Mining companies clash over Congo copper mine". The Guardian. https://www.theguardian.com/business/2010/sep/06/congo-copper-mine-first-quantum-enrc. 
  28. ↑ "First Quantum Minerals suspends Kolwezi Tailings Copper Mine Development". Proactive Investors. 18 September 2009. http://www.proactiveinvestors.com/companies/news/2450/first-quantum-minerals-suspends-kolwezi-tailings-copper-mine-development-2450.html. 
  29. ↑ Chanel de Bruyn (30 August 2010). "DRC withdraws permit for First Quantum's Frontier mine". Mining Weekly. http://www.miningweekly.com/article/first-quantum-suspends-operations-at-drc-mine-permit-revoked-2010-08-30. 
  30. ↑ Michael J. Kavanagh; Franz Wild; Jonathan Ferziger (January 2013). "Rich Man, Poor Country". Bloomberg Markets: pp. 66–76. 
  31. ↑ "ENRC shareholders approve Gertler deal". Mining Journal. 28 December 2012. http://www.mining-journal.com/finance/enrc-shareholders-approve-gertler-deal. 
  32. ↑ Group at a glance, Retrieved 2 September 2020

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