Mining to Kazakhstan
Trends and opportunities
Kazakhstan remains one of the world’s most promising emerging markets for
natural resources and is one of the 10 leading countries in the world for
mineral reserves. The country’s mining industry is a dominant part of the
national economy which in 2017 contributed approximately 30 per cent of export
earnings, 9 per cent of national GDP and 19 per cent of industrial employment
(Source: www.export.gov). The country benefits from its geographical
location being a supplier of commodities to Asia and Europe. Kazakhstan
holds vast mineral reserves which are largely undeveloped. The country
possess 30 per cent of the world’s chrome ore reserves, 25 per cent of
manganese ore, 10 per cent of iron ore, 5.5 per cent of copper, 10 per cent
of lead and 13 per cent of zinc, according to official estimates. The
Central Asian republic is also richly endowed with uranium, gold, coal,
bauxite, phosphate, titanium and tungsten. Kazakhstan is currently the
world’s leading producer of uranium, the third largest producer of chrome
and seventh largest producer of zinc.
The mining industry in Kazakhstan is focused mainly on extraction and
export of raw materials and base metals, with further high-value processing
abroad. About 80 per cent of mining products are exported representing 20
per cent of the country’s total exports.
Kazakhstan will remain an important center for iron ore mining in the near
term. Strengthening trade links between the Kazakhstan and Chinese
governments is likely to provide local miners with further capital to fund
expansion, which will support moderate growth in production through to 2026
and beyond. The China Development Bank continues to fund the development of
aluminium and iron ore mining projects in Kazakhstan.
Kazakhtsan is an important transit route for China’s One Belt One Road
initiative which is expected to strengthen trade links between China and
the Central Asian states. Kazakhstan’s strategic location means that it is
well placed to leverage demand, mainly from China and India, as well as
meeting the growing needs of the domestic economy. Its about AUD 2.5
billion financing project for ERG
On 27 December 2017 Kazakhstan adopted a new Code "On Subsoil and Subsoil
Use". The new Subsoil Code was developed on the basis of the Western
Australian model. The purpose has been to boost geological exploration and
remove administrative burdens for junior miners.
Starting from 2010, Austrade and the Australian mining equipment,
technology and services association (Austmine) have been arranging mining,
engineering, technology and services (METS) missions to Kazakhstan. The
missions provide Australian suppliers of products and services with
opportunities to access the local mining industry, establish contacts with
leading mining companies in the region and get firsthand information on the
recent developments in the mining sector.
Opportunities for Australian suppliers of METS exist across the full
spectrum of activity in several mining sectors and geographic regions of
Key areas of opportunity include:
- geological exploration
- mining software and systems development
- drilling contractors
- integrated project management
- laboratory and consultancy services
- business process consulting
- engineering services
- low grade ore processing technologies
- training and other services
- research and development collaborations
Recent reports by BMI confirm the significant potential of Kazakhstan’s
mining and infrastructure sectors. A high volume of foreign direct
investment and a well-established export market are two positive factors
for investors entering Kazakhstan. Foreign mining companies in Kazakhstan
include Glencore, Rio Tinto, Iluka Resources, Central Asia Metals Plc,
Areva Sa, ArcelorMittal, Russian Copper Company, and United Company Rusal.
Rio Tinto Group is in the process of investing around AUD 100 million into
the copper mine in Northern Kazakhstan. Rio Tinto formed a 50/50 venture
with Tau-Ken Samruk (the national operator of mining assets in Kazakhstan)
to tap the country’s mineral resources. Another JV has been formed with
KazGeology, the Kazakh National Exploration Company. Engineering and
construction costs are expected to be about AUD 1 billion.
Iluka Resources conducts geological exploration in Kazakhstan targeting
rutile and zircon-containing mineral sands deposits. The second stage of
aero-geophysics started in July 2016.
The Kazakhstan Government is interested in attracting new investors in the
industry. The country regularly hosts major investor events such as the
Astana Mining and Metallurgy Congress, Mining World Central Asia and Minex
According to Standard & Poor’s, Kazakhstan’s mining and metals industry
has low costs and considerable growth opportunities. Companies in the
sector can build competitive advantage through factors such as access to
quality resource deposits, moderate energy and labour costs and less
stringent environmental requirements. Kazakhstan is ranked relatively high
in the 2018 Doing Business report (36 out of 190 countries) and has
reformed its mining legislation. Mining companies have good reserves.
Significant proportion of the deposits is easily accessible, allowing the
use of less sophisticated and therefore less costly technologies.
Kazakhstan’s mineral raw materials base is significant in its size and
variety, with over 60 out of 105 elements of Mendeleev’s Table being
extracted in the country. As a result, around 230 registered mining
enterprises are involved in mineral production and processing operations in
Kazakhstan. The main players in the market are large domestic holdings set
up by local entrepreneurs as a result of privatisation of former state
assets, subsidiaries of international companies and smaller businesses,
including some Australian green-fields operations. An ongoing process of
mergers and acquisitions and investment activity continues to significantly
transform the industry.
The largest mining companies active in Kazakhstan include:
Eurasian Resources Group: one of the world’s leading diversified mining and smelting groups
with fully integrated mining, processing, energy production, logistical
and marketing operations. The Eurasian Group comprises one third of the
mining and metals sector of Kazakhstan. Its key commodities include
chromium, manganese, iron ore, bauxite and coal.
Kazakhmys: the largest copper producer in Kazakhstan, leading international
company in sphere of mining and development of natural resources.
Copper operations are fully integrated from mining ore through to the
production of finished copper cathode and rod. The copper division also
produces large amounts of other metals as by-products, including zinc,
silver and gold.
Kaz Minerals: a high growth copper company focused on large scale, low cost, open
pit mining in Kazakhstan. It is one of leading copper producers in
Kazakhstan with five operating mines and four concentrators. The Group
is listed in London, Kazakhstan and Hong Kong. Major growth projects
include Bozshakol, Aktogay and Koksay. Read a mining company profile on Kaz Minerals (PDF).
ArcelorMittal Temirtau: an integrated mining and metallurgical complex with its own coal,
iron ore and energy base in Karaganda region. Part of the Arcelor
Mittal global steel empire.
Bogatyr Coal: One of the world's largest open-pit coal mining enterprises operating
two mines - Bogatyr and Severny. The total industrial reserves of the
company are about 3 billion tons of coal.
Kazzinc: a mining company founded in 1997 with a majority stake privatised to
Swiss commodity trader
. Kazzinc is a major fully integrated zinc producer with considerable
copper, precious metals and lead assets.
Tau-Ken Samruk: a national operator of state assets in the metals and mining industry
of Kazakhstan. Тau-Кеn Samruk is a partner of Glencore and owns 29.8
per cent shares in the capital of Kazzinc. The company is actively
seeking investors, including foreign investors, to participate in the
development of a variety of projects ranging from early-stage
exploration to project development. Tau-Ken Samruk has entered into an
exploration joint venture with Rio Tinto.
Kazatomprom: a national operator of Kazakhstan’s government-owned uranium and rare
metals assets as well as the national producer of nuclear fuel for
power plants. Kazakhstan is the world’s largest producer of uranium.
One Mining: the largest undeveloped tin deposit in the world. As of
2014 JORC-compliant Mineral Resource Statement, the reserves are 94.5
million tonnes of ore and 463.5 K tonnes contained tin with average
grade of 0.49 per cent.
- Kazakhaltyn: one of the oldest gold industry enterprises in the country located in the Akmola region. The company has three operations producing gold from
both open-pit and underground mines. In 2015, the enterprise produced
more than 800 kg of gold.
Central Asia Metals
: London-based company owning 100 per cent of the Kounrad solvent
extraction and electrowinning copper facility in Kazakhstan.
Key issues and challenges
World Bank indicated the growth of Kazakhstan economy, which started to
recover from the crisis caused by the fall of global oil prices. The
economy achieved real GDP and grew by 4.3 per cent on a year-on-year basis in the first nine
months of 2017, compared to 0.4 per cent in the same period of 2016. However, the
oil sector remains the main driver of the economic growth as the oil
production increased by 12.5 per cent year-on-year for the same period of 2017.
The national currency, the Tenge, for a long time was kept within the
corridor of 145 to 155 per US dollar under the managed float policy. In
February 2014, it was devaluated by 19 per cent to about 185. A freely
floating exchange rate for local currency was introduced in 2015 resulting
in further Tenge depreciation. The current exchange rate is about 330 tenge
per US dollar.
In the mining sector, the low level of mineral processing within Kazakhstan
arguably limits the country’s ability to establish a value-chain and
exacerbates dependence on volatile world markets. Some local ores are less
competitive on the world market because of low concentrations that require
complicated extraction methods and consequently drive up production costs.
Technology and business processes can be quite antiquated in Kazakh mining
operations. Obsolete equipment and outdated work practices require
producers to invest in innovative technologies and implementation of more
modern business processes to be internationally competitive. Kazakhstan
mining companies are generally keen to embrace new approaches and ready to
implement world-class equipment, technology and services to increase
production, cut costs and improve health, safety and environmental
performance, but decisions can take considerable time.
Kazakhstan also faces infrastructure constraints. Stemming from the legacy
of the Soviet Union, the Kazakh mining industry is largely integrated into
a single production chain with Russia and Ukraine. Existing infrastructure
is designed to direct much of mining output to these countries. A lack of
transport infrastructure and the fact that China's industry is located
mainly in the eastern part of the country – far from the shared border –
significantly increase transportation costs to China. Nevertheless, China
remains an important and growing market for Kazakh mining producers.
– large projects (with reserves of more than one billion tonnes of iron
ore) are the Sokolovsky, Sarbaiskoye, Kasharsk, Ayatsk and Lisakovsk
deposits located in Kostanai region, as well as the Atasusk group of
fields. Tau-Ken Samruk is planning to set up production of tungsten and
molybdenum concentrates and tungsten products at the large deposit at
– Kazchrome (part of ERG holding) is one of the world’s largest
ferrochrome producers, supplying the market with a range of high-grade
chromium alloys. Kazchrome also produces rutile, zircon and ilmenite
concentrates. Kazchrome integrates four operating companies: Donskoy
Ore Mining & Processing Plant, Aktobe Ferroalloy Plant, Asku
Ferroalloy Plant, Kazmarganets Mining Enterprise (manganese). Turkish
YILDIRIM Group owns the Voskhod Chrome enterprise in northwestern
Kazakhstan comprised of a state-of-the-art underground mine and a
modern ore processing plant.
– Kazakhmys, the leading copper producer, operates 16 underground and
open-pit mines (with the largest at Zhezkazgan), nine processing plants
(incl. enrichment plants at mines Nurkazgan, Shatyrkul and Kosmuryn)
and a copper smelter. In 2014, Kaz Minerals separated from Kazakhmys to
operate the most promising copper mines in the country including four
existing mines and three growth projects (Bozshakol, Aktogay and
Koksay) as well as three concentrators. Other copper miners: Aktobe
Copper Company (part of the Russian Copper Company), Kazzinc, Polymetal
(Russia), Central Asia Metals PLC (UK), Rio Tinto (exploration of
Korgantas mine started in 2015).
– Kazzinc is exploring multiple fields including Ridder-Sokolnoe,
Shubinsky, Maleevsk and Obruchevsk. Tau-Ken Samruk has formed a joint
venture with an international partner to develop Alaygyr field in
– Aluminium of Kazakhstan JSC (part of ERG holding) includes the
Kazakhstan Aluminium Smelter (KAS), Pavlodar aluminium plant, the
Torgai and Krasnooktyabrsk bauxite mining units, the Keregetas
limestone mine and the Pavlodar heat and energy plant. It holds the
rights to subsoil deposits of Akmola group. State mining company
Tau-Ken Samruk is exploring low-grade bauxite deposits.
– Syrymbet is the largest undeveloped tin deposit in the world
containing 94.5 million tonnes of ore.
– Iluka Resourses, Australian mining company, conducts geological
exploration in Kazakhstan's promising areas looking for the available
resources of ilmenite, rutile, zirconium and tin in the mineral sand
Titanium and magnesium
– Ust-Kamenogorsk Titanium-Magnesium Plant (UKTMP), with a major
European shareholder, is one of the world's largest titanium sponge and
magnesium producers. UKTMP is developing a mine at the Satpaev field to
partially satisfy the country’s ilmenite concentrate needs.
– Kazakh industrial group Sat&Co owns two nickel enterprises
(KazNickel LLP and Ferronickel Plants Ertis) developing nickel and
cobalt deposits and refining cobalt-nickel ores of Gornostayevskoye
deposit. The plants produces ferronickel FN 20. Tau-Ken Samruk and
other companies are considering proposals for the introduction of
innovative technologies to engage in processing of poor-grade oxidised
– the majority of Kazakhstan’s gold production comes from the
processing of polymetallic and copper ores. Leading gold producers are
Kazzinc, Kazakhmys, KazakhAltyn, Polymetal (Russia). In addition, about
100 other companies have licenses to produce gold in Kazakhstan.
In Kazakhstan, rare metals are typically produced alongside non-ferrous
metals, for example, rhenium in the production of cathode copper and
gallium in the production of alumina. Indium, thallium and selenium are
removed from the dust of lead production, while tellurium is derived from
alloys of the alkali refining of black lead.
Cadmium and thallium are extracted from lead-bearing concentrates.
Tantalum, beryllium, niobium and molybdenum are produced by Kazatomprom,
the Kazakh state-owned nuclear holding company.
Kazatomprom has also recently signed an agreement on strategic partnership
with the French Bureau of Geological and Mining Research (BRGM) and the
European company of monitoring and strategic consulting (CEIS) to perform
geological exploration of the country’s REE fields.
In 2016, KazGeology, Kazakhstan’s state-owned national exploration company,
and the Japan Oil, Gas and Metals National Corporation (JOGMEC) signed an
agreement to conduct geological exploration of the two Kazakh REE in
Karaganda and Oksana regions. Both fields are characterised by high yttrium
Rare earth elements in the lanthanide group are produced by Irtysh
Rare-Earth Company. A highly promising rare earth metals deposit has been
found at Kundybayskoe in Kostanai region.
Kazzinc also plans to launch REE production at its capacities in the
Ust-Kamenogorsk region of the country.
Tariffs, regulations and customs
In December 2017 Kazakhstan adopted a new Code "On Subsoil and Subsoil Use" (the Subsoil Code). The Subsoil Code replaced the previous statute regulating oil and gas and mining activities. The code will come into force in 2018. The new Code introduces Australian model for granting subsurface use rights based on the principle of "first come - first received", transition to international system for natural resources calculation, geological information assurance, development of program for management of state fund of subsurface resources, regulation of uranium and coal bed methane development, intensive extraction of mineral resources.
Links and industry contacts
Government, business and trade resources for Kazakhstan
Association of Mining Enterprises of Kazakhstan
Baker & McKenzie Doing business in Kazakhstan 2017
Deloitte Kazakhstan Highlights 2018
EY Doing business in Kazakhstan 2016
Eurasian Resources Group
Ministry for Investments and Development of the Republic of Kazakhstan
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