Eurasian Natural Resources Group (ENRC), the FTSE 100-listed Kazakh mining company, is seeking acquisition opportunities, with business booming thanks to surging demand for commodities.
ENRC reported strong half-year results yesterday, showing revenues up 86 per cent to $3.4bn (£1.81bn) and earnings before interest, tax, deductions and amortisation up 170 per cent to $2.2bn with a margin of 62.5 per cent.
Despite rising costs in raw materials and labour overheads, the group is almost doubling capital expenditure from $3.5bn to $6.9bn, including mine expansions and extra smelting capacity. With average ferroalloy and iron ore prices up by 130 per cent and 62 per cent respectively, it can afford it.
Miguel Perry, the chief financial officer, said: "We are confident of a strong performance in the second half because, despite the cost pressures, we think the current record levels of pricing of ferroalloy and iron ore are set to continue for the foreseeable future."
ENRC's relationship with Kazakhmys – a smaller rival that rejected a takeover approach this year and has built up a 25 per cent stake in the larger group – is the subject of speculation. But assumptions that the stake enables Kazakhmys to block ENRC acquisitions are unfounded, as is the suggestion that Kazakhmys has asked for, and been refused, a seat on the board, Mr Perry said. "We have not received a formal request for a board seat," Mr Perry said. "But in the event that we did, the answer would be no, for the simple reason that we are interested in the same types of opportunities for consolidation in the region – and we are very busy at the moment."
ENRC shares closed up 35p at 1,062p. Rob Clifford, an analyst at Deutsche Bank, said: "The first-half result for ENRC was very strong – it beat expectations, it announced a doubling of the organic growth pipeline, costs were in line with stated company expectations and further earnings growth in the second half is a given."Reuse content