Kazakh government official to be proposed as new chief executive in upcoming vote at privately owned mining group
Eurasian Resources Group, the international mining company, is facing seminationalisation in a boardroom showdown over efforts to replace the
company’s leadership with a top Kazakh government official.
The board of the former FTSE 100 company will vote in an extraordinary general meeting as soon as Friday on a measure that would install Roman Sklyar as chief executive, according to documents seen by the FT.
Sklyar was appointed as head of Kazakh President Kassym-Jomart Tokayev’s presidential administration this week and was formerly the first deputy prime minister. He is currently one of the five board members of ERG.
The resolution is being brought by Sklyar and Madi Takiyev, another board member who is also Kazakhstan’s minister of finance.
A battle over the future of ERG, which was previously known as ENRC, has been playing out as the descendants of the founders of the company - three oligarchs known as “The Trio” - each pursue different visions for its future. One member from each of the three families makes up the other ERG board members.
With mining assets that extend from Brazil to the Democratic Republic of Congo to Kazakhstan, Luxembourg-based ERG is a major producer of copper, cobalt and ferrochrome and is among the world’s largest privately owned mining groups.
Each of the founding families owns around 20% of the company, with the Kazakh government holding the remaining 40%.
Earlier this year, two out of the three founding families agreed to sell their shares to Kazakh entrepreneur Shakhmurat Mutalip, in a deal estimated to be worth around $1.4 billion (€1.19 billion), according to people close to the transaction.
The 35-year-old entrepreneur, an ally of President Tokayev, owns Kazakh building group Integra Construction KZ, and has recently been involved in several major domestic mining deals, despite being a relative newcomer to the sector.
The change in ownership at ERG is part of a broader changing of the guard across Kazakhstan’s resources sector, as the older generation close to the country’s previous president, Nursultan Nazarbayev, is gradually being replaced.
ERG was listed in London under its previous name, ENRC, but was delisted from the London Stock Exchange in 2013 after a corruption probe from the Serious Fraud Office, which was dropped a decade later.
Mutalip’s purchase of the 40% ERG stake has not yet been finalised, according to people familiar with the discussions. He is understood to be in discussions over financing for the deal, including with several Kazakh banks as well as the Abu Dhabi Commercial Bank, they added.
His bid for ERG set up a confrontation with current chief executive Shukhrat Ibragimov, the son of one of the company’s founders and a board member, who had previously tried to buy the 40% stake from the two other families but failed to raise the capital.
The company’s board is set to meet on Friday to vote on a series of resolutions, which propose to replace the company’s chief executive, chief financial officer, head of sales and marketing, and chief legal officer.
The resolutions propose that Roman Sklyar would replace Ibragimov as chief executive, according to a copy of the proposal seen by the FT.
Installing a sitting official at the head of ERG, ostensibly a private company, would expand the government’s control over the company, which employs more than 60,000 people around the world.
The government has been keen to push through Mutalip’s acquisition, as well as a potential deal for ERG to sell metals to Swiss miner Glencore - both of which have faced resistance from Ibragimov, according to people familiar with the matter.
ERG and Glencore did not comment. Sklyar and Mutalip could not be reached for comment. The press office of Kazakhstan’s president did not immediately respond to a request for comment.
Article source: FINANCIAL TIMES
