London, UK-based Eurasian Natural Resources Corporation (ENRC) has announced plans to acquire the shares of Kazak thermal coal producer Shubarkol Komir that it does not already own.
ENRC, which currently owns 25 per cent of Shubarkol, said that its directors have unanimously approved to exercise rights to acquire the 2,638,103 outstanding shares for up to $600 million, plus assumed debt of $50 million.
ENRC said completion of the acquisition will strengthen its integrated business model by securing a reliable and cost-effective supply of semi-coke and low-cost, relatively high quality thermal coal used in the production processes of the group’s Ferroalloys, Iron Ore and Alumina & Aluminium divisions, to support future growth.
With the inclusion of Shubarkol, ENRC’s coal production capacity in Kazakhstan will now exceed 25 million tonnes per annum.
In 2010, Shubarkol’s output was approximately six million tonnes of coal, accounting for approximately 5.4 per cent of Kazakhstan’s total coal production. As of 1 January 2011, Shubarkol’s proved and probable coal reserves totalled 326.2 million tonnes. Measured and indicated coal resources (inclusive of reserves) were 1,378 million tonnes and inferred coal resources were 192 million tonnes.
Commenting on the proposed deal, Felix J Vulis, chief executive officer of ENRC, said: “This is an important strategic acquisition which secures reliable access to the supply of relatively high quality and low-cost thermal coal. Our increased coal production capacity in Kazakhstan, which will exceed 25 million tonnes per annum, will support our existing operations and expansion plans, enabling us to maintain our advantageous low-cost production position.”
Mehmet Dalman, the senior independent director of ENRC, said: "This is an excellent transaction for ENRC and based on the quality of the asset, strategic importance of the commodity and the price, is incrementally value enhancing to our shareholders."
ENRC performs integrated mining, processing, energy, logistics and marketing operations, its operations comprising the mining and processing of chrome, manganese and iron ore; the smelting of ferroalloys; the production of iron ore concentrate and pellet; the mining and processing of bauxite for the extraction of alumina and the production of aluminium; the production of copper and cobalt; coal extraction and electricity generation; and the transportation and sales of the group's products.
The group's production assets are largely located in Kazakhstan; other assets, notably its Other Non-ferrous division, are mainly located in Africa. The group also has iron ore assets in Brazil.
The group's entities in the first half of 2011 employed on average 75,050 people.
