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Eurasian Resources Group (ERG), backed by Kazakhstan, is set to undertake a significant restructuring of its African operations, including a review of mining permits in the Democratic Republic of Congo (DRC) and a potential divestment of assets in Mozambique. This overhaul is a direct response to the severe downturn in the global cobalt market, which has seen prices plummet to record lows.
Nicolas Treand, CEO of ERG’s Africa unit, revealed the company’s plans during an interview at the Mining Indaba in Cape Town. The strategic review aims to reduce costs and optimize the company’s portfolio in the face of challenging market conditions.
“The market is pretty, pretty bad and pretty depressed, and I think it’s going to be depressed for the next two to three years,” Treand stated, highlighting the severity of the current cobalt market situation.
In the DRC, where ERG holds numerous mining permits, the company intends to “clean house” by reviewing and potentially relinquishing permits that are proving too costly to maintain. “My priority is basically to clean house in the DRC because we have too high costs maintaining all these licenses in DRC right now,” Treand stated.
Despite ongoing conflict in eastern Congo, Treand expressed confidence that ERG’s operations remain unaffected. “He doesn’t foresee the war in the east of Congo impacting ERG Africa’s operations “as we are too far away,” Treand said.
In addition to the DRC review, ERG is also considering the sale of assets in Mozambique. Furthermore, the company is evaluating projects in South Africa and Zimbabwe as part of a broader effort to streamline operations and enhance profitability.
This strategic restructuring underscores the challenges facing mining companies in a volatile global market. By focusing on cost reduction and asset optimization, ERG seeks to navigate the current downturn and position itself for long-term success.
