First, that is likely a STONE veneer on the wall. If you don't like it you have to remove it. Or you could paint it.

You can also remove part of the stone and add a timber mantel to the FP

Here are the steps to get the stone off and the surround installed.

I agree remove it and please take pics from further back . What I see are very formal window coverings so I need to see the rest of the space and also a pic of the surround you think you want.

Is it possible to add a drywall around it to cover the stone rather then removing it? I think it would be more cost effective if that is possible

half the battle are those windows. I also think remove before bandaid, plus the added bulk of dry wall on the sides next to the windows might be hard to do?

I also think all the paint color is throwing it off as well.