China’s Zijin Mining Group bought RG Gold, a Kazakhstan-based gold miner, in the latest business transaction by billionaire Bulat Utemuratov.
RG Gold exploits gold mines in the northern Akmola region of Kazakhstan, near the capital Astana. Through a Luxembourg-based company, in turn owned by the holding Verny International, Utemuratov controlled 65 percent of RG Gold.
Zijin Mining spent $1.2 billion to buy the company, which has the rights to develop one of the largest gold deposits in Kazakhstan.
At the end of September, Zijin Mining became the third-largest gold miner in the world, after its market capitalization surpassed $100 billion. With gold prices above $4,000 per ounce, this could be a massive deal for the Chinese company.
“The Raygorodok Gold Mine can generate favorable synergies with the Jilau/Taror Gold Mines in Tajikistan and the Taldybulak Levoberezhny Gold Mine in Kyrgyzstan [and] can help Zijin Gold International further deepen its engagement in the Central Asia region in the future,” according to the company’s October 12 press release.
In 2022, RG Gold inaugurated a new mining and smelting complex with a processing turnover of up to 5 million tons of gold ore per year, which was co-financed by the Development Bank of Kazakhstan for $297 million.
The deal should net Utemuratov around $780 million.
Utemuratov is one of Kazakhstan’s richest businessmen. His close relationship with former President Nursultan Nazarbayev certainly helped his business deals. According to a leaked 2007 U.S. diplomatic cable, Utemuratov is “a billionaire who has never had a business.”
In fact, he famously became the country’s first billionaire in 2007, when he sold his stake in ATF Bank to Italy’s UniCredit Group for $2.2 billion, which was considered an inflated price and turned the deal into a “disaster” for UniCredit.
With the funds, Utemuratov financed Verny Capital, his investment vehicle that acquired an interest in another key miner, Kazzinc – which was later sold to commodity trader Glencore for $3.2 billion.
In 2014, Verny obtained the rights to explore the Raygorodok plot and established RG Gold.
At present, Utemuratov controls telecoms company Beeline, the Burger King franchise, and ForteBank, the country’s fifth-largest bank.
In September, the Agency for the Regulation of the Financial Market approved ForteBank’s bid to buy Home Credit Bank, Kazakhstan’s 11th-largest bank. The deal would reinforce ForteBank’s position in the market. By the end of September, ForteBank had already completed the acquisition of a 26.8 percent stake in Home Credit. On October 15, ForteBank postponed the shareholder meeting that should have led to the completion of the deal, from October 29 to February 26 next year.
Earlier in October, Kazakhstan’s ambassador to Hungary, Abzal Saparbekuly, said that OTP Bank was interested in investing in Kazakhstan. Rumors suggested that OTP Bank could take over ForteBank.
On October 16, Forbes Kazakhstan published two official responses that did not resolve the doubts. OTP said that it is “actively exploring new acquisition targets, particularly in Central and Eastern Europe, as well as other countries with high growth potential,” without mentioning ForteBank, which in turn said they have “no information” regarding any negotiation.
This could be yet another sale for Utemuratov, who has already sold his media outfit Channel 31 and his stake in the Ritz Carlton Vienna hotel in the past two years.
Known for his efforts in growing Kazakhstan’s reputation in the world of tennis, Utemuratov has also made a number of charitable donations, funding the reconstruction of the airport in Kyzylorda, as well as the construction of a school and a sports center in Kosshy, in the outskirts of Astana.
Having concentrated a number of profitable businesses under his Verny conglomerate over the years, Utemuratov has progressively, and profitably, sold off a number of assets. Should ForteBank be next, this would be the first time in more than a decade that a top-five lender in the country is foreign-owned.