GLENCORE has proposed an $800m pre-payment arrangement to help finance a little-known Kazakh entrepreneur’s $1.4bn bid for a 40% stake in Eurasian Resources Group, the Luxembourg-based miner formerly listed in London as ENRC.
According to the Financial Times on Thursday, the Swiss commodities giant has offered upfront funding in exchange for future ferrochrome deliveries. The proposal would support Shakhmurat Mutalip, a 35-year-old construction entrepreneur, in his effort to acquire the combined holdings of two of ERG’s three founding families — the Chodiевs and Mashkevichs — who each hold roughly 20% of the company, the newspaper said citing three people familiar with the situation.
ERG was established in the 1990s when a trio of Kazakh oligarchs — Patokh Chodiev, Alexander Mashkevich and Alijan Ibragimov — acquired formerly state-owned mining assets following the Soviet Union’s dissolution. The company employs 67,000 people and operates assets ranging from cobalt and copper mines in the Democratic Republic of Congo to aluminium and iron ore facilities in central Asia.
Mutalip’s bid has edged ahead of a rival offer from Shukhrat Ibragimov, ERG’s chair and chief executive and son of co-founder Alijan Ibragimov, who struggled to secure financing. Any deal requires approval from all three major shareholder families as well as the Kazakh government, which holds a 40% stake.
Glencore and Mutalip are also said to be in discussions over his separate bid to acquire Glencore’s 70% stake in Kazzinc, valued at around $3.5bn. Glencore previously considered a £12bn takeover of ERG in 2011, attracted partly by its ferrochrome operations.
Kazakhstan is the world’s third-largest high-carbon ferrochrome producer, behind China and South Africa.
