Eurasian Natural Resources Corp has acknowledged heightened reputational issues that accompanied its move into Africa last year but the Kazakhstan miner remained determined to expand its new asset base, Financial Times reported.
ENRC has built on the acquisition of London-listed Camec by buying additional copper and cobalt assets last year in the Democratic Republic of Congo, resulting in its copper-division revenues increasing from $41m to $412m year on year.
The acquisition included a Congo copper deposit that First Quantum Minerals, its former owner, claimed was expropriated by the government. The matter is currently subject to international arbitration.
Last December, First Quantum served $2bn in claims on the Congo assets now controlled by the Kazakh miner, but subsidiaries of the consortium that owns those assets have applied to strike out the claims.
ENRC said it had a regular dialogue with shareholders over corporate governance, the business acquisition processes and the perceived level of risk.
"We are aware that some of the jurisdictions in which the group operates pose particular and often heightened reputational issues that need to be managed appropriately," it added.
ENRC said its strategy remained unchanged in that it was "interested in its major core products, ferrochrome and iron ore, but will also consider looking at opportunities to enhance our recently acquired copper, cobalt and platinum assets, as well as the potential of thermal coal".
In the year to December 31, high profits margins at its chrome-mining business combined with a resurgent iron ore market delivered pre-tax profits of $3bn, up from $1.4bn.
A pre-tax profits margin of 45 per cent in 2010 held relatively steady compared with 37 per cent in the downturn-hit year of 2009 and 56 per cent in 2008. Ferrochrome and iron ore pushed group revenues from $3.8bn to $6.6bn - a 72 per cent gain - while earnings per share rose from 81 cents to 170 cents.
The full-year dividend of 30.5 cents (12 cents) will mostly be enjoyed by five parties: founding shareholders Alexander Mashkevitch, Patokh Chodiev and Alijan Ibragimov, in addition to rival miner Kazakhmys and the government of Kazakhstan.
These shareholders control three-quarters of shares in the blue-chip London-listed miner.
Michael Rawlinson, head of natural resources at Liberum Capital in London, said ENRC suffers a 10-20 per cent ratings discount because of perceived governance issues.
"While the recent M&A controversies fade from view, the ratings gap will take some time to close," he said. "That is a shame as these are high-quality, well-run and fast-growing assets."
Shares in ENRC rose 18.5p to 917p.