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The mining conglomerate once known as ENRC has sunk to its biggest annual loss since delisting from the London Stock Exchange over a decade ago, as borrowing costs and foreign exchange fluctuations weighed on its finances.
Privately held Eurasian Resources Group, which has mines in Kazakhstan, Brazil and the Democratic Republic of Congo, reported a pre-tax loss of $1.2bn last year, according to accounts filed in Luxembourg this month. That compared with a loss of $44mn in 2023.
The results come amid a power struggle for the former FTSE 100 company, which once had a market value of £13bn and was taken private in 2013. Shukhrat Ibragimov, the son of one of the Kazakh oligarchs who founded the mining group, is seeking to buy out his late father’s partners, in a deal that would give him a majority stake, the Financial Times reported in May.
Ibragimov, 39, took over as chief executive in October and has pledged to implement a new strategy that seeks to capitalise on rising global demand for many of the metals ERG produces, such as copper and aluminium.
The annual loss was largely driven by financing costs that reached $1.2bn, almost double the previous year, as foreign exchange losses grew to almost $600mn, from $88mn. Another $568mn was spent on servicing debts and changing the terms of some of its borrowings, up $135mn on the year before.
In a statement to Financial Times, ERG said the “paper loss” had been incurred in part as a result of the depreciation of the Kazakhstan Tenge, which fell by 15 per cent against the dollar last year. While group revenues are reported in dollars, the “functional currency” for its Kazakh assets is the Tenge.
ERG added that its underlying earnings before interest, tax, depreciation and amortisation rose by 22 per cent to $1.9bn last year, as production of ferroalloys, iron ore and alumina had all increased.
The Luxembourg-registered conglomerate receives a large part of its financing from Russian banks VTB and Sberbank, which were sanctioned by the EU and the US following Russia’s full-scale invasion of Ukraine in February 2022.
The company had an outstanding debt of $3bn with VTB as of 2023. In its 2024 accounts ERG said it had restructured its credit facility with the bank in order to proceed with payments under “all applicable laws and regulations,” swapping about $2bn of dollar-denominated debt owed to VTB into Chinese Yuan.
The year before, ERG completed a similar restructuring of its credit facility with Sberbank, according to the accounts.
ERG also revealed in its accounts that it had paid a $366mn dividend earlier this year to the government of Kazakhstan, which owns 40 per cent of the company.
The dividend had been declared in previous years but payment was blocked by “legal restrictions” in Luxembourg, which had since been lifted, it said, without providing further details.