Eurasian Resources Group (ERG) is considering selling its assets in Mozambique as part of a restructuring strategy to reduce costs and face the crisis affecting the mining sector globally. The information was revealed by Nicolas Treand, CEO of the company’s African division, in an interview with Bloomberg TV during the Mining Indaba conference, held in Cape Town, South Africa.
According to Treand, the cobalt and chromium market is facing a serious recession due to low prices and global oversupply, which has led ERG to review its investments in Africa. Among the measures being analysed is the disposal of assets in Mozambique, as well as the review of concessions in the Democratic Republic of Congo (DRC), South Africa and Zimbabwe.
‘The market is quite depressed and I believe it will remain so for the next two to three years. Our priority now is to reduce costs and optimise our assets in southern Africa,’ said Treand, quoted by Engineering News.
The crisis in the sector is particularly evident in the market for cobalt, an essential metal in the production of batteries for electric vehicles. With a slowdown in demand and an increase in supply, prices have reached historic lows, putting pressure on mining companies operating in Africa. Chromium, another resource exploited by ERG, has also been affected by fluctuations in the global market, aggravating the company’s financial challenges.
Against this backdrop, ERG is evaluating all of its operations in the region. In the DRC, for example, the company wants to reduce operating costs, since mining licences represent a significant weight in its expenses.
Treand recognised that the company needs to adjust its investments to maintain long-term sustainability, a strategy that may include selling assets in Mozambique.
‘Our aim is to clean house, especially in the DRC, where costs are too high to maintain all the licences. We want to focus on strategic and profitable assets,’ explained the executive.
Despite the financial difficulties, ERG has minimised the impact of the war in eastern DRC on its operations, arguing that the mines are located far from the conflict zones.
ERG’s possible departure from Mozambique raises questions about the future of its assets in the country and the impact on the local economy. In recent years, Mozambique has attracted significant investment in the mining sector, and the sale of ERG’s assets could signal a new cycle of readjustments and reassessments by foreign companies operating in the country.
There is still no final decision on the sale of the assets, but sources close to the process indicate that the company is studying different scenarios to minimise the effects of the crisis in the sector. Should the sale materialise, it will be yet another reflection of the instability of the global market and the need for the big mining companies to adapt to new economic dynamics.
