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 KAZAKHSTAN International Business Magazine №5/6, 2010
 Baiken-U: Stability of Development and Care of the Future
Baiken-U: Stability of Development and Care of the Future

Joint venture Baiken-U is carrying out the development of the Kharasan-2 site of the North Kharasan uranium deposit in Kyzylorda Oblast. Baiken-U General Director, Murat Murtazayev, who has been heading the company since 2010, shared with the Kazakhstan magazine the progress of things on the development of this, the deepest uranium deposit in Kazakhstan, by using a method of underground leaching.

Murat Arzayevich, you have extensive experience in managing the largest mining enterprises in Kazakhstan. What were the reasons for your coming to work for Baiken-U?

Let’s start with the company’s background. Baiken-U was set up by the national atomic company Kazatomprom in March of 2006 in the framework of the 15,000 Tons of Uranium by the Year 2010 Program. At that time, grand objectives were set before Kazatomprom, and large investments were required for the development of new deposits. In view of this, Japanese investors were invited to join the Baiken-U project, while the company itself was re-registered into the JV in connection with the change in the founders. At the given moment, Energy Asia Limited – a consortium consisting of six Japanese energy companies – holds a 95% stake in the enterprise, while Kazatomprom holds the remaining 5%. Here, we have to mention that Energy Asia Limited provides 100% investment of the funds required for the project development, while the Kazatomprom provides the mineral production contract and guarantees on the loans of Japanese banks. In 2008 long-term contracts for the supply of produced natural uranium for the period from 2010 through 2025 inclusive with the right to extend them for another 20 years were concluded. Under the contract, the Japanese investors will get 70% of the uranium produced at the Kharasan-2 mine, while the Republic of Kazakhstan in the person of Kazatomprom will get the remaining 30%.

Last year, in parallel with the construction of the mine and the geological survey operations, the company started pilot production. Right at that time, a number of technology-related issues, of which the mistakes were made in 2006 while selecting an approach for the deposit development, emerged. Delays with the production program fulfillment followed and, as a consequence, the lack of financing. The necessity of launching a program of measures to provide the stable operation of the mine arose. In this connection, Vladimir S. Shkolnik had approached me with the proposal to run the enterprise, and I agreed with pleasure, since I have never feared complicated projects and have always preferred to work at operating productions.

What are the specifics of the North Kharasan deposit development?

This field is part of the Chu-Sarysu uranium province, richly endowed with the given element. Meanwhile, we have to mention that the development of the Syrdaria river right bank was started as early back as in the Soviet times, and the deposits there are well studied, the technologies are worked out, and the relevant infrastructure created, while the development of the left bank of the river begun only after Kazakhstan had gained its independence. Of course, the exploration there was carried out in the Soviet epoch; still, not all reserves were estimated exactly, and the conditions and economic feasibility of the deposits development were determined.

As of the current moment, we are continuing the geological survey operations in order to specify more exactly the reserves stated many years ago – this is some 20 thousand tons, while as predicted there are 60 thousand tons more in the uranium-bearing deposit. We have to carry out a full estimate of conditions, to make exact estimates, and in March of 2012 to state the reserves with the State Committee for Geological Reserves. In general, the design production capacity of the Kharasan-2 site is estimated at 2,000 tons of uranium a year, while the predicted terms of the mine operation is not less than 40 years.

As you see, this is indeed a productive site. Along with that, the Kharasan-2 specifics are the depth of occurrence of 650m to 700m, and ore-bearing with a higher content of carbonates. All this requires a higher accuracy while drilling and working out the technology.

In this connection, the main task of mine became to prove the industrial benefit of the deposit, to remove inaccuracy in the estimates, and to choose the optimum technology of production and exploration. We engaged specialists with extensive experience, carried out the analysis, and performed work on re-profile on part of geophysics, and we had to stop or re-drill some of the wells…

As a result, the output increased, and the uranium content as of the present moment, increased by 1.5 times the target indicators. In the first half of 2010, the uranium production was 129.1%, compared to the same period of the last year. Based on the results of the current year, we have to produce 200 tons in 2010, 320 tons in 2011, and starting from 2012 the industrial output will be 550 tons of uranium a year. It is scheduled that the mine will reach its design capacity in 2017.

In general, today the enterprise operation is rather stable, and we have already hit the target on production on October 18, and on sales on October 22. In the current year, Baiken-U LLC was the first in the system of the National Atomic Company Kazatomprom JSC, who was awarded a certificate of passing through CT-KZ for the commodity. In September, as per the schedule, we repaid the first installment on the loan agreement to the Japanese banks, and in December we will repay the second one. Moreover, we have updated the feasibility study and business plan of the project for the investors and creditors; this will allow providing extra financing.

What is the progress of things with construction, as provided for under the project?

Today, the amount of investments in the construction under the Uranium Production by Using the Underground Leaching Method at the Kharasan-2 site of the North Kharasan Deposit project and of the south-east flank is more than 15.3 billion Tenge.

We achieved considerable success in the construction of infrastructure of the mine. In May of 2010, the field camp for 245 people, built on the territory of the enterprise, was put into commission to the state commission.

The industrial site is undergoing active development. In the first place, the storages, operator’s room of the fuel stations, administrative building, amenities complex, canteen, pumping units, boiler-house, outer heating system, electric power supply facilities and other auxiliary infrastructure were put into commission.

The construction of the plant, including a shop for processing of commodity stripping into the chemical concentrate of natural uranium oxide concentrate, has continued. At present, the first facility is 60%–80% ready, while the second one is 20%–30% ready. Now we carry out the processing into the “yellow cake” at the facilities of neighboring enterprise, Kyzylkum LLC, and into uranium oxide concentrate at the Stepnogorsk chemical plant. In July of the next year, allowing for the metal output in the amount of 350–500 tons a year, we are planning to complete and deliver for acceptance the first phase of the plant by putting into operation the start-up complex. From January 2012 we will begin processing uranium at our own production facility. At last, in 2014, when we come over the rate of production at one thousand tons a year, the plant will start operating at its full design capacity.

The implementation of such complicated technological projects as yours, undoubtedly, requires the engagement of highly-skilled specialists. What is the Baiken-U’s policy in the human resources development issue?

We regard thoroughly the selection and training of our staff. I always believe that if a man wishes to become a real professional in some area, this person has to work hard to achieve this goal and aspire to constant self-development. My task as the chief is to help the employees in that. At the current moment, we put the main focus in the HR training program on raising the skills of the mid-level staff – foremen and chiefs of the sites. Now, for example, we are discussing the issue of sending some employees for practical training in the mines of South Africa. On the whole, owing to Baiken-U, 22 people are being trained and re-trained currently in the Kazakhstani and Russian institutions of higher education.

Concerning the motivation and encouragement, we have good benefits to encourage our employees. Apart from the rises in wages and bonuses as per the national legislation, we also have the company’s internal regulations, providing for a pay in the amount of a monthly payment to support health and for preventive health care; also, so the plan of financial encouragement is developed. They will be paid 30% of the premium pay for national holidays and up to 60% of the quarterly premium pay for the plan fulfillment. It is enough to say that just in the current year the wages of the employees rose by 56%.

We do not forget about maintaining of the corporate spirit; we celebrate together holidays, conduct sport events, and in August of 2010 our enterprise participated for the first time in the annual sports day, conducted by the National Atomic Company Kazatomprom JSC in Almaty.

The conditions of labor and rest play the key role in maintaining loyalty. I mentioned already that in May of 2010 we completed the project of construction of the field camp worth of more than 1.35 billion Tenge. Now with pride we can affirm that our employees live in modern conditions, meeting the highest international standards. For efficient management of household services, we concluded a contract with the international company ADEN REMOTE SITE LIMITED. They are engaged in the provision of catering, sanitation, cleaning, and washing. In short, good conditions were created for the workers, and there are places where they can rest. They can sit in a hall near a fireplace, play football, volleyball, tennis, billiards, or go to the fitness center, sauna, swimming pool, cinema and café.

The uranium mine as people comprehend is hardly considered as a desired neighbor. How do the residents of Zhanakorgansky rayon and other districts of the oblast treat your undertaking?

Indeed, there are a lot of rumors about the so-called “uranium phobia”, but the modern technologies turned them into a myth long ago. We are governed by the technical-technological and ecological norms, set forth in the laws, and the IAEA requirements on accounting, control and safety in the carrying out of operations with natural uranium. To ensure the radiation safety of the population and personnel, the Program of Ensuring the Quality of Radiation Safety of the Personnel was developed and introduced, and a labor protection service set up. All this excludes the causing of any harm to the people’s health and to pollution of the environment.

We are building up relations with the local population, following the best practice of neighborliness. Under the mineral production contract, in the period of geological survey operations the social-related deductions to the region shall be not less than $50 thousand a year, while in the period of production they have to be in the amount of to 15% of the annual operating costs, but not less than $100 thousand a year. Undoubtedly, we are consistent with the contract; along with that, our approach in the matter of providing help to the population of the region is wider. We just do what is necessary for our neighbors. If there is a need to build a road, to lay a water pipe, to provide help to the hospital or school, Baiken-U allocates funds for that, considering these expenses are the investments for the common cause. For the relatively short period of the company’s operation in the region, we contributed a lot to the social development of Kyzylorda Oblast. In 2008–2009, the company allocated 223.1 million Tenge for construction of motorways in Zhanakorgansky rayon, while in the current year 14 million Tenge is provided to support various social-related facilities. We constantly provide help to our neighbors. We honor the World War II veterans and those who worked in the rear; we are trying to get to the root of the problems of the local population’s routine life. More than 100 jobs are created in the company for the rural population. Today, the local population considers it honorable to get a job in our company, a fact that is approved by the district akimat (administration). No “uranium phobia” at all.

Our plans for the future are extensive. The reason is that next year the National Atomic Company Kazatomprom will move to Astana. Being a production unit, we also decided to move all our facilities to the production site. In June of 2010, Baiken-U relocated almost 40% of the company headquarters employees to the Kharasan-2 mine; the rest of the employees will move to the site in the first quarter of 2011. This step is seen to increase cost effectiveness to the maximum. Here, the important fact to know is that with the mass moving to the site, we will create, in fact, a new zone of the nuclear field workers in the Zhanakorgan rayon center, since the company’s employees will move with their families. We already have in plans the construction of a cottage village in Zhanakorgan, and discussed this idea with the shareholders and akimats. The project implementation will give a colossal impetus of development to the region. Just imagine, how many new jobs will be created. Entrepreneurs will launch their small and medium businesses there; they will open shops, amenities centers, kindergarten, first aid station, and so on. Of course, this will entail the development of the entire infrastructure of the region. The ongoing changes are already seen: the water and electricity supply improved, the old roads are repaired, and the new ones are constructed. I am glad to realize that our company was part of that, and contributed to the improvements.


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Partnership without Borders  Charles Monk 
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