Mineral Resources Exploitation 2000–2011: Reserves, Production, and Investment
Mineral resources management and exploitation is the foundation of the social and economic development of Kazakhstan and remains one of the most attractive areas for investment. Total investment in production of various minerals in the last 12 years exceeded $200 billion; however the intensive operation of the existing fields by the mineral producers requires the strengthening of the role of the state in advanced study of mineral resources.
Currently, more than 80% of explored mineral reserves are being developed by mineral producers on a contract basis. On January 1, 2012 the total number of operating facilities covered by monitoring was 2,529. This includes 827 facilities of the republican level, including 243 engaged in hydrocarbons production, 384 engaged in solid minerals mining, and 200 engaged in groundwater production. With this, the exploitation of mineral resources is carried out at 1,676 sites.
In 2000–2011 total investment in mineral production reached $200.2 billion; of this, $18.1 billion was directed to conduct geological exploration (Table 1). Compared to 2000, the annual volume of investment increased by more than 5 times and totaled $20.3 billion at the end of 2011. $1.5 billion, or 8% of the total investment in the mineral and raw material sector was directed to conduct geological exploration (Chart 1).
In 2011, the oil and gas industry remained the priority sector for investment. It was invested by approximately $13.8 billion, or 70% of all investment in the mineral and raw material sector. Investment in the mining sector accounted for about $6.2 billion (30%), including $1,160.1 million in coal mining, $1,044.6 million in uranium mining, $1,022 million on polymetallic ore mining, $824.9 million in copper mining, $804.7 million in gold mining, $785.8 million in mining of iron ore, manganese, etc. It should be noted that investment in geological prospecting in the mining sector accounted for only 3% of the total investment (Chart 2).
According to predictions for 2012, following the end of the year the capital investment in the mineral and raw material sector is likely to reach $21.6 billion, including $1.6 billion for carrying out geological exploration.
Investment activities of the mineral producers had a positive effect on the socio-economic indicators in Kazakhstan. Thus, over the past 12 years, they invested $2.3 billion in social development and local infrastructure (including $317.5 million in 2011), $905.5 million ($162.6 million) in training of specialists, $308.1 million ($20.2 million) in acquisition of technologies (Chart 3). During this time, the number of employed within the mineral and raw material resources sector increased from 175 thousand people in 2000 to 181 thousand in 2011.
Gold and gold deposits are located in 16 mining areas, the most important of which are the Kalbinsky and Rudno-Altaisky deposits in East Kazakhstan (Bakyrchik, Bolshevik, and Ridder-Sokolnoe deposits), Kokshetausky and Zholymbet-Bestobinsky deposits in North Kazakhstan (Vasilkovskoye, Zholymbet etc.), Shu-Ilisky and Jungarsky in South Kazakhstan (Akbakai, Beskempir, Arharly, etc.), and Maykainsky and North Balkhash in Central Kazakhstan (Maykain, Boschekul, Sayak, etc.), as well as Zhetygarinsky and Mugojarsky in Western Kazakhstan (Komarovskoye, Varvarinskoye, Jubileinoye, etc.).
Today, mineral production of gold is being carried out at 119 sites; of them, gold is being mined at 39 sites, exploration is being carried out at 30 sites, and combined exploration and mining at 50 sites. In 2000–2011, over 400 tons of gold was mined in Kazakhstan, an increase by about 600 tons. Total investment for this period reached $4.3 billion (an increase by 13 times); of this, $0.4 billion was directed to carry out exploration. Some 85% of this amount was mined by companies such as Kazzinc (25% was invested in mining of gold in 2011), Mining and Metals Concern Kazakhaltyn (13%), JSC Varvarinskoye (13%), JSC FIC Alel (9%), LLP Bakyrchikskoe Mining Company (9%), LLP Metal Trading (5%), LLP Jubileinoye (3%), DTOO Mining Enterprise Sekisovskoe (3%), LLP JV Saga Creek Gold Company (2%), and JSC Maikainzoloto (2%).
The greater portion of copper reserves and copper-bearing beds recorded in the state balance sheets are concentrated in East and Central Kazakhstan. A number of pyrite-polymetallic deposits in eastern Kazakhstan (Artemyevskoe, Kosmurun, Akbastau, etc.) are the reserve for the enlargement of the mineral and raw material base. The porphyry copper deposit Nurkazgan, bearing high quality ores, in Central Kazakhstan, and one of the largest deposits in the country Zhaman-Aibat in the Zhezkazgan mining area were put into operation. The Aktogai and Bozshakol porphyry copper deposits, where the construction of ore dressing and processing facilities is in progress, and the Aydarly and Koksai deposits have considerable potential.
At the present moment, mineral production of copper is being carried out at 40 sites; of them, mining is in progress at 14 sites, exploration at 8 sites, and combined exploration and mining at 18 sites. In 2000–2011, more than 6 million tons of copper was mined in Kazakhstan, an increase of about 4 million tons. Total investment during this period increased threefold, reaching $4.7 billion; of them, $110.4 million was allocated for geological exploration. All capital investments in 2011 were made by Kazakhmys Corporation (81%), LLP Copper Technology (14%), LLP KazCooper (2%), LLP The Aktobe Copper Company (1%), and LLP GRK MLD, LLP KazGeorud LLP, Koksai-Muzbel, LLP Tarutinskoye, and LLP Fonet Er-Tai AK Mining.
To develop the SMEs engaged in polymetallic ore mining, the large deposit Shalkiya in South Kazakhstan will be under development in the coming years. On this basis, a new zinc plant will be constructed. The construction of mines on the basis of mining deposits Novoleninogorskoe, Dolinnoye, and Obruchevskoye in East Kazakhstan is currently in progress. An ore dressing and processing enterprise operates on the basis of the proven chalcopyrite deposits with the name "50 Years of October", Kundyzdy, Priorskoe, and others, where the setting up of mining and metal facilities are planned.
In general, mineral production of polymetallic ore is being carries out at 33 sites; of them, mining is being carried out at 19 sites, exploration at 2 sites, and combined exploration and mining at 12 sites. Over the past 12 years 1.3 million tons of lead and 7 million tons of zinc were produced in Kazakhstan, an increase of 0.7 million tons and 1 million tons, respectively. Total investment in polymetallic ore mining during this period reached $6.6 billion; of this, just $98.1 million was allocated for exploration. Based on the 2011 year results, the capital investment in 2011 increased fivefold, compared to 2000, to $1,022 million, including $19.1 million for exploration. Among the largest investors, there are such companies as Kazzinc (71%), Kazakhmys Corporation (22%) and LLP Nova-Zinc (5%), the proportion of the others – JSC Shaimerden, LLP ER-TAY, LLP ORPEK Mineral Resources, Multiplex Resources, LLP ShalkiyaZinc, and JSC Zhairemskiy ore dressing and processing plant – is minor (less than 1%).
The reserves of hard-to-process bauxite of the East Torgai bauxite-bearing region (Krasnooktyabrskoye, Ayatskoe, and other deposits) form the basis for the SMEs of the aluminum industry. Earlier, this hard-to-process bauxite was considered unsuitable for production of alumina, but with the introduction of new technology developed by the Pavlodar aluminum plant, the conditions for production of alumina from low-grade bauxite were created. The prospects for development of the raw materials industry today are associated primarily with non-customary types of alumina raw material. Nepheline-leucite and nepheline rocks, also alunite secondary quartzites, widely found in the republic, can be of practical interest.
Currently, mineral production of bauxite is being carried out at five sites; of them, mining is being carried out at 3 sites, exploration at one site, and combined exploration and mining at the other site. Over the twelve-year period, Kazakhstan produced almost 55 million tons of bauxite, an increase of just 0.7 million tons in the bauxite reserves (there wasn’t any growth at all from 2000 through 2007.) Total investment within the period of 2000–2011 exceeded $1 billion; of this, $14.1 million was directed for exploration. In the last year alone, $135.8 million was invested that is 4 times more than in 2000. The entire investments were made by the subdivisions of JSC Aluminum of Kazakhstan – KBRU (84%) and TBRU (16%).
The Republic has enormous resources of iron ore, about 90% of which is concentrated in the Torgai region of North Kazakhstan. Iron is mainly mined at the Sokolovsky, Sarbaisky, and Kacharsky iron ore deposits and other skarn-magnetite ore deposits, as well as at the Lisakovsky brown ironstone deposit.
Products of the iron ore industry (ore concentrates and pellets) are supplied to the Karaganda Metallurgical Combine and in small bulk to the Aksu Ferroalloy Plant and Aktobe Ferrochrome plant. Also, they are exported to Russia and China. The explored iron ore reserves allow ensuring a substantial increase in production of iron ore products; however, the limiting factor here is the problem of marketing the products.
With regard to manganese, all of its commercial reserves are concentrated in Central Kazakhstan and are presented by oxide and carbonate-silicate-oxide ores (Ushkatyn III and West Karazhal deposits, etc.). Five mining companies located in the Karaganda region operate in the manganese ore industry today.
Mineral production of iron and manganese is carried out at 42 sites; of them, mining in in progress at 16 sites, exploration at 10 sites, and combined exploration and mining at the rest 16 sites. In 2000–2011, 449 million tons of iron and 30 million tons of manganese were produced in Kazakhstan; an increase in the reserves amounted to 1,702 million tons and 66 million tons, respectively. Over this period, $5.1 billion was invested in the industry, including $60 million in exploration. In 2011, investments totaled $785.6 million. Practically, all the investments were made by major companies, such as JSC SSGPO (67%), JSC Zhairemskiy ore dressing and processing combine (14%), LLP Orken (9%), JSC TNC Kazchrome (4%) and LLP Arman-100 (1%). Less than 1% was invested by LLP Bapy Mining, LLP Vertex Holding, JSC Temirtau Electrometallurgical Combine, LLP Aktobe-Temir-VS and LLP Shakhta Zapadnaya.
Kazakhstan is the world leader in terms of chromite reserves. These chromite reserves are characterized by high quality of ore (45–50% of chromium oxide) and are bedded on a relatively small area within the Kempirsaysky dunite-periodit mass in West Kazakhstan (Millionnoye and Almaz-Zhemchuzhina deposits, etc.). The transnational company Kazchrome engages in mining and dressing of chromite ore; one of its divisions deals with ferroalloy production.
Mineral production of chromite is being carried out at 9 sites. Each of them is at the phase of mining operations. Over the past 12 years, Kazakhstan produced 41 million tons of chromite, an increase of about 1 million tons. Investments for this period totaled $2.2 billion, including $20 million for geological exploration. In 2011, investments in the sector totaled $279 million, which is twice more than in 2000. Along with JSC TNC Kazchrome (76%), a major investor of the industry was LLP Voskhod-Oriel (26%).
The main uranium reserves are concentrated in hydrogenic deposits of South Kazakhstan (Mynkuduk, Karamurun, etc.). Inferred resources are almost equal to the reserves recorder in the state balance sheets. They are concentrated mainly in the uranium-bearing provinces of South Kazakhstan.
As of April 1, 2012, mineral production of uranium was carried out at 25 sites; of them, mining operations are in progress at 12 sites, exploration at one site, and combined exploration and mining at the other 12. In 2000–2011, 88 thousand tons of uranium was produced in Kazakhstan, recording an increase of 111 thousand tons. Total investment for this period amounted to $5.4 billion, including $300 million, directed for geological prospecting. Talking about the last year’s performance indicators, the amount of investment reached $1,044.6 million, including $60 million allocated for geological exploration. It is of note that all the uranium mining and processing companies are united into NAC Kazatomprom’s structure; the latter comprises also the metal works for deep processing of uranium ore.
The greater portion of the coal reserves are distributed within the five major coal-bearing provinces in Central and North Kazakhstan (Karaganda, Ekibastuz, etc.). These provinces comprise more than 300 coal deposits and coal occurrences of different age and grade composition.
Mineral production of coal is being carried out at 39 sites; of them, coal mining is in progress at 31 sites, and combined exploration and mining at 8 sites. Over the past 12 years Kazakhstan produced 9,438 million tons of coal, an increase by 103 million tons. During this period $6.7 billion was invested total, including $30 million in exploration. Compared to 2000, investments in coal production in 2011 increased 5-fold to $1.2 billion, while investments in exploration were just $0.5 million. The greater portion of investment were made by large companies, such as Coal Department of JSC ArcelorMittalTemirtau (37%), Bogatyr Komir (17%), JSC Eurasian Energy Corporation (15%), LLP Angrensor (4%), Kazakhmys Corporation (4%), JSC Shubarkol Komir (6%), LLP Karazhyra Ltd (3%), LLP Maikuben West (3%), LLP Saryarka-ENERGY (2%), and LLP Gamma "(2%).
Since the introduction of a contract system in the area of mineral production, the budgetary allocations for geological exploration in Kazakhstan have sharply decreased. As a result, the increase in mineral reserves in recent years by the main types of mineral raw materials was mainly due to private investments in geological exploration. With this, the current day reveals a shortage in replenishment of the minerals reserves by a number of priority types of minerals that will shorten the period of time in the future during which the stocks of the minerals will be available for supply to the metals & mining and oil & gas industries.
In view of that, the Concept of Development of Geology in Kazakhstan till 2030 was developed, which aims to address some critical issues that include:
· Low level of advanced geological study due to lack of funding from the state;
· The trend that mining is carried out at bigger depths and prospective deposits become more remote;
· Critical decrease in availability of mineral reserves of the backbone enterprises of the nonferrous metallurgy;
· Poor development of geological infrastructure and the lack of certified laboratories, also the decline of applied science;
· Insufficient control over the efficient and integrated use of mineral resources due to the low number of personnel and poor condition of provision of the state geological service with technical equipment and materials;
· Lack of professionals;
· Imperfection of the laws and regulatory framework in the area of geology and mineral resources.
JSC The National Geological Prospecting Company Kazgeologiya, set up under Resolution of the Government No. 684 of June 21, 2011, is seen to play an important role in solving these problems. The scope of activities of the said company involves:
· Replenishment of mineral resources of the country;
· Participation in implementation of the general state policy in the area of geological exploration;
· Carrying out geological prospecting to discover minerals, including the search and evaluation of mineral deposits;
· Development and introduction of new high-tech and efficient technologies in geology;
· Storage, processing and systematization of the databank of geological information;
· Effective management of the stakes (participating interests) of the enterprises of the geological industry owned by the company.
This information was prepared by Elvira Djanturaeva, PhD, Head of Mineral Production Results Analysis, RCGI Kazgeoinform Geology and Subsurface Use Committee under the RK Ministry of Industry and New Technologies.