Mineral production from 2000–2013: Reserves, production, investment
Leadership in proven reserves of priority types of mineral raw materials contributed to a high interest in the extracting projects of Kazakhstan among investors. However, the lack of replenishment of the on-balance reserves, observed in the last decade, can become a major obstacle to sustainable development of the domestic mining and metallurgy sector. Thus, the current task is to promote geological exploration, taking into account the transfer of advanced technologies and mineral resources development.
Kazakhstan is among the top ten countries in terms of the richness and diversity of mineral resources. The country ranks 1st in the world in terms of the on-balance tungsten reserves, 2nd for uranium and chrome ore, 4th for gold and manganese, 5th for lead and zinc, 6th for iron ore, 8th for coal, 10th for tin and titanium, etc.
More than 80% of proven minerals reserves are developed in Kazakhstan on a contract basis. As on January 1, 2014, the total number of the facilities in operation, monitoring the mineral production, was 2,475. These include 836 facilites on the national level and 259 of them are engaged in the monotoring of hydrocarbons, 392 in solid minerals, and 185 in groundwater. 1,639 facilites engage in production of common minerals.
From 2000–2013 the aggregate investments in the mineral production sector of the country reached $205.9 billion. $19.5 billion (9%) of them was invested in geological exploration. Compared to 2000, the annual capital investments in the last year had increased by almost 6 times to $22.6 billion. $1.3 billion or 6% of total investment in the mineral resources sector was allocated for geological exploration. It is expected that by the end of 2014, these figures will be $23.3 billion, and $1.4 billion, respectively.
Talking about the investments structure by mineral groups, we can mark again that oil and gas industry are leaders as last year: $15.4 billion, or 68% of all investment in the mineral resources sector, was invested in it (it is five times more than was invested in hydrocarbons in 2000). $6.9 billion, or 30% of total investments, was invested in the mining sector (a seven-fold increase), $301.7 million, or 1.5% in common minerals (a ten-fold increase), and $67.5 million, or less than 1% in groundwater (a two-fold increase). With this, only 6% was allocated in geological exploration over the past 14 years.
In the mining sector, the following areas have become the priority ones for investment: production of coal (with $1,221.6 million of investments), uranium ($1,219.3 million), polymetallic ($1,047.1 million), iron and manganese ($1,009.3 million), copper ($974.8 million), and gold ($800.8 million). It is worthy of noting that investments in geological exploration in 2013 accounted for only 3% of the total investment in solid minerals.
Investment activity of mineral producers positively affects the socio-economic and industrial development of the country. In the past 14 years they have allocated more than $2,773.6 million ($241 million of them, in 2013) for the social welfare and development of local infrastructure, $1,152.7 million ($145.7 million in 2013) for the training of specialists, and about $369.8 million ($12.5 million in 2013) for the acquisition of technologies. The number of personnel involved under the contracts has increased to 192 thousand people against 175 thousand in 2000.
Gold
Possessing substantial reserves of gold, Kazakhstan is one of its main producers in the world. As of January 1, 2013, the on-balance gold reserves in the country (categories A+B+С1+С2) accounted to more than 2 thousand tons. These were the aggregate gold reserves of the 212 facilities taken into account; gold is produced at 92 of these facilities, and at the other 120 facilities gold exploration is in the active phase. About 40% of gold reserves are located in the East Kazakhstan region, 22% in the Akmola region, 10% in the Karaganda region, 9% in the Kostanai region, and the rest of the reserves in other regions of the country. Of the gold producing companies, Kazzinc has the largest gold reserves developed on the contract areas (more than 30%); then it follows Kazakhmys Corporation (15%) and Kazakhaltyn (more than 6%). Large gold producers are Varvarinskoye (4%), AK Altynalmas (more than 2%), Metal Trading (2%), and Maikainzoloto (2%).
Prognostic gold resources in Kazakhstan are estimated at more than 9 thousand tons. Of these, gold ore resources account for about 75% of all gold resources, and complex gold-bearing resources 25%. Real resource growth prospect is associated with the deep horizons of already explored gold bearing deposits, mainly in Central and Eastern Kazakhstan, as well as promising ore-bearing rocks in the northern and southern regions of the country.
Most of the gold deposits have refractory ores; thus, their development requires the solving of technological challenges. Moreover, the know-how for the production of low-margin ores is needed, since the easily accessible near-surface (oxidized) gold ores are almost exhausted. Solving the enrichment problem of refractory ores will allow launching into operation the Bakyrchik deposit, which is unique by reserves, and a number of smaller similar sites.
At the moment, 117 gold bearing sites are under development. Of these, gold is being extracted at 33 sites, exploration in progress at 37 sites, and combined exploration and production at 47 sites. In 2000–2013, 516 tons of gold was produced in Kazakhstan. With this, the growth of gold reserves amounted to 794 tons. Total investments over this period had reached $5.9 billion (a 13-fold increase); of this, $465 million was allocated for geological exploration. About 87% of this capital investment was made by such companies as Kazzinc (38% of the investment in gold deposits development in 2013), Kazakhaltyn (13%), Varvarinskoye (12%), FIG Alel (8%), Orion Minerals (3%), Yubileinoye (4%), SE Sekisovskoe (3%), Altynalmas (4%), and Maikainzoloto (3%). With regard to projections for 2014, the capital investment in the gold mining industry in this period are expected to reach $825.6 million, including $41.9 million in exploration.
Copper
Today, in terms of proven copper reserves, Kazakhstan lags behind only these countries: Chile, Australia, Peru, Russia, USA, Mexico and China.
As on January 1, 2013, the on-balance reserves (categories A+B+С1+С2) of copper accounted for more than 38 million tons on the 94 sites covered by the estimate. Of the latter, copper production is carried out at 56 sites, and copper exploration at 38 sites. Most of copper bearing deposits are located in Eastern Kazakhstan (43%) and Karaganda region (35%). The lion's share of copper reserves in development on the contract areas are by Kazakhmys Corporation (72%), Koksai-Muzbel (5%), Kazzinc (4%), and Copper Technology (4%).
The inferred copper resources of Kazakhstan are estimated at 100 million tons. They are concentrated within the known copper ore fields, flanks and deep horizons of the copper sandstone deposits in Central Kazakhstan, as well as the pyrite-polymetallic bearing deposits of Eastern Kazakhstan, and chalcopyrite deposits of Western Kazakhstan. Central, Eastern and Southern Kazakhstan have all the potential for strengthening small and medium businesses operating in the copper industry. Favorable conditions for development of the copper-zinc industry are also created in Western Kazakhstan. There, the mining and metallurgical production can be organized on the basis of proven copper-pyrite deposits. The largest deposits of copper-porphyry: Aktogai, Aidarly, Boschekul, and Koksai, have great prospects for development. However, the mineral resource base of the industry on the Rudny Altai is gradually shrinking. One of the main problems for the mining enterprises that have been operating in the region for a long time is the lack of reserve deposits for development.
The development of copper deposits is currently underway at 46 sites among them 13 is being currently implemented, exploration is at 15 sites, and combined exploration and production at 18 sites. Over the past 14 years, more than 7 million tons of copper have been produced in Kazakhstan; the increase in reserves has been 5.5 million tons. Total investment over this period has increased by more than 3-fold, reaching $7.2 billion. $161 million of this amount, was allocated for geological exploration. Last year, $760.1 million was invested in the industry. 97% of this amount, was the aggregate investments in major companies such as Kazakhmys Corporation (78%), Copper Technology (11%), Kazakhmys Bozshakol (4%), and Fonet Er-Tai AK Mining (1%). According to current year forecasts, the capital investment in copper development deposits will be $1,005 million, including $13.8 million for geological exploration.
Polymetals
Kazakhstan lags behind only Australia, China and Russia, in terms of zinc proven reserves, and Australia and China, in terms of lead. To date, the on-balance state reserves (categories A+B+С1+С2) have accounted for 33 million tons for zinc and 15 million tons for lead. In terms of regions, they are concentrated in the East Kazakhstan region (38% of zinc, and 22% of lead), Karaganda region (33% and 62%, respectively), and Kyzylorda region (17% and 12%). Most of the contract areas are under development by the following companies: Zhairem (30% of lead and 19% of zinc), Kazzinc (17% and 24%), Kazakhmys Corporation (16%), Shalkiya Zinc Ltd (11% and 16%), and NC SEC Saryarka (10% and 4%).
Inferred resources of zinc are estimated more than 135 million tons and lead in it is about 60 million tons. Mostly, they are concentrated in the eastern, southern and western regions of the country. The main problem of the lead and zinc industry is the lack of mining and processing works in the areas where the deposits have been explored. This doesn’t allow to conduct their full-scale development. Along with that, the reserve life of the deposits under development doesn’t exceed 10-15 years.
At the moment, the development of polymetallic ore deposits is in progress at 29 sites. The mining is carried out on 18 of them, exploration at 5 sites, and combined exploration and production at 6 sites. 2.3 million tons of lead and 8.3 million tons of zinc have been produced in the country over the past 14 years. The growth on these resources enlarged to 1 million tons and 1.9 million tons, respectively, (there was no growth at all in 2013). Over this period, more than $ 8.7 billion have been invested; and only $128.8 million of them, was allocated for geological exploration. Last year the capital investment increased 5-fold, reaching $1,047.1 million. The large companies that had invested in aggregate 98% of all investments in polymetallic ore deposits development are as follows: Kazzinc (71%), Kazakhmys Corporation (22%), Nova-Zinc (4%), and Shaimerden (2%). It is expected that the capital investment in development of lead- and zinc-bearing deposits in 2014 will rise to $1,079.6 million, including $11.1 million for exploration.
Iron and manganese
In terms of explored reserves of manganese ore, Kazakhstan is behind Ukraine and South Africa, and in terms of iron ore stays behind Russia, Australia, Brazil, Ukraine and China.
The on-balance reserves (categories A+B+С1+С2) of manganese and iron ores amount to 688 million tons and 18,618 million tons, respectively. More than 92% reserves of manganese ore are located in the Karaganda region and nearly 6% in the Mangystau region. As for iron, the deposits of iron ore are mostly located in the Kostanay region (85%), Aktobe region (5%), Karaganda region (4%), and Akmola region (3%).
The main reserves of manganese are under development today by Orken (52%), Zhairemsky Mining and Processing Works (32%), KARUAN (6%), and NC SEC Saryarka (3%). The same for iron are SSGPO (46%), Orken (20%), DP Aktobe-Temir-VS (10%), Masalsky Mining and Processing Works (6%), and NC SEC Tobyl (5%).
Inferred resources of manganese ores in Kazakhstan are estimated at more than 4 billion tons. Over 80% of this volume is concentrated in the Karaganda region, within the ore fields of the known manganese and manganese-bearing deposits, and about 19% in the Aktobe and Zhambyl regions. Resources of iron ore, which is 123 billion tons, are mainly (60%) concentrated in the Kostanai, Karaganda and Aktobe regions.
The development of iron ore and manganese ore deposits today is implemented at 43 sites. At 16 of them, production of the said ores is carried out, exploration at 11 sites, and combined exploration and production at 16 sites. From 2000–2013, 596.5 million tons of iron ore and 35.7 million tons of manganese ore were produced in Kazakhstan. The growth of reserves was 1.9 billion tons and 86.4 million tons, respectively. Investment for this period reached nearly $7.1 billion. Of this amount, $69 million was allocated for geological exploration. The largest investors are such companies as SSGPO (68%), Zhairemsky Mining and Processing Works (12%), Orken (10%), TNC Kazkhrom (3%), Bapy Mining (2%), and Arman-100 (1%). In the current year the capital investment in development of iron and manganese ore deposits is expected to reach $1,040.6 million, including $9.5 million in exploration.
Boxites
Kazakhstan is among the top twenty countries in terms of bauxite reserves. All industrially important bauxite deposits are mainly concentrated in the Torgai bauxite rich province of the Kostanay region, which reserves of categories A+B+С1+С2 are estimated at 345 million tons. The greater part of the bauxites developed on the contract areas (90%) fall on KBRU, the subdivision of Aluminium of Kazakhstan. The remaining part of the bauxites under development is equally divided between the second subdivision of the said company and the company Didar.
Inferred resources of bauxite in Kazakhstan are estimated at 809 million tons. Most of them are concentrated within the Torgai bauxite-bearing province, and today the most prospects of discovering commercially promissing bauxite-bearing areas are associated with the Central Torgaiskoye ore province.
Currently, the developmnet of bauxite deposits is carried out on 5 sites. Mong them production of bauxites is implemneted at 4 sites and exploration at 1 site. From 2000–2013, 67 million tons of bauxite was produced in the country, and the increase in the reserves amounted to 1 million tons (no increase was marked in the last year). Capital investment over this amounted period, to almost $1.3 billion, including $21.3 million for geological exploration. In 2013, Aluminium of Kazakhstan invested in development of bauxite deposits $137 million (86% fell on KBRU and 13% on TBRU), which is more than four times more than in 2000. This year, the amount of capital investment is expected to increase till $141.5 million, including $3.6 million on exploration.
Chromites
In terms of chrome ore total reserves, Kazakhstan ranks 2nd in the world, and in terms of their quality the 1st. As on January 1, 2013, the on-balance reserves (categories A+B+С1+С2) accounted for nearly 370 million tons. They are concentrated in Western Kazakhstan on a relatively small area within the Kempirsai dunite-periodite province (Millionnoye, Almaz-Zhemchuzhina deposits, etc.). Inferred resources of chrome ores are about 2 billion tons, 90% of which is concentrated in the Aktobe region (43%) and Kostanai region (47%).
TNK Kazkhrom, which has a ferroalloy production division within its structure, engages in mining and processing of chromite ore. This company is developing on the contract area 94% of all chromite ore in the country, and Voskhod-Oriel is developing the remaining 6%.
The development of chromite ore deposits is underway at 8 sites, which are all at the stage of production. Over the past 14 years, 55.5 million tons of chromite have been produced in the country, and the reserves increased by almost 1 million tons (no growth was in 2013). Over this period, $2.8 billion was invested in the industry, including $25.5 million in exploration. In 2013, the capital investment was over $310 million, which is twice more than in 2000. Along with Kazchrome, which accounts for 82% of all chromite ores under development, a major investor in the industry is also Voskhod-Oriel (18%). Talking about the outlook for the current year, these companies are expected to allocate $319.8 million for the development of chromite ore deposits, including $0.3 million for geological exploration.
Coal
Proven coal reserves in Kazakhstan amount to more than 34 billion tons, which 62% is coal and 38% is lignite. Currently, under development are 5 coal basins and 14 coal fields, where the open-cut mining technique is mainly applied.
Projected coal resources exceed 100 billion tons. 25% of them, is coal and 75% is lignite. Most of these resources are concentrated within Karaganda coal basin and Torgai lignite basin. The remaining resources are unevenly distributed, mainly in northern and southern Kazakhstan.
In general, the development of coal deposits is carried out on 42 sites. In 34 of these the coal is mined, and at the rest 8 combined exploration and production is underway. By companies, Bogatyr Komir has the largest stockpiles of coal (8%); then it follows ArselorMittalTemirtau (5%), Shubarkol Komir (5%), Maikuben West (4%), Eurasian Energy Corporation (3%), etc.
Today, the replenishment of resources lags behind their use. In 2000–2013, at the rate of cumulative production of 1,241 million tons of coal, an increase in coal reserves amounted to only 115 million tons. Nevertheless, given the available resources, Kazakhstan will be provided with its own coal for years ahead.
With regard to investment, more than $9 billion was invested in the coal mining industry of the country over the 14-year period, including $36.8 million in geological exploration. In 2013 the capital investment in the industry exceeded $1.2 billion, which is a rise of more than five times than in 2000. To the list of major investors, the investments of which reach 96% of all allocations in the sector, we can mention ArcelorMittal Temirtau (32%), Bogatyr Komir (18%), Eurasian Energy Corporation (16%), Shubarkol Komir (8%), Karazhyra Ltd. (4%), Kazakhmys Corporation (4%), Razrez Kuznetsky (4%), Angrensor Energo (3%), Maikuben West (3%), and Gamma (3%). It is expected that in the current year more than $1,259.5 million will be allocated for development of coal deposits, including $4.9 million for geological exploration.
Uranium
Kazakhstan has in its bowels almost a fifth part of the world's uranium reserves. The state on-balance reserves record 854 tons of uranium, which are mainly concentrated within the Shu-Sarysui and Syrdarya uranium provinces (South Kazakhstan region and partially the Kyzylorda region). Inferred resources of category Р1 made 625 tons; they are confined to the flanks and deep horizons of known uranium deposits.
As of January 1, 2014, the development of uranium deposits was carried out on 27 sites; of these, uranium is produced at 14 sites, combined exploration and production is carried out at 12 sites, and one site is covered by exploration. In 2000–2013, 131.5 thousand tons of uranium was produced in Kazakhstan; the growth of stockpiles was 158.7 tons. Total investment over this period reached nearly $7.8 billion; of these, $479 million was allocated for exploration. Last year, the amount of capital investment reached $1,219.3 million, and in 2014 they are projected at $1,257.1 million, including $84.7 million in exploration.
It should be noted that all uranium mining and processing enterprises are combined into the structure of NAC Kazatomprom. This company is the national operator for import/export of uranium, rare metals, nuclear fuel for nuclear power plants, special equipment, technologies and dual-use materials.
Exploration challenges
It should be noted that today, by a number of priority types of minerals, the lack of their replenishment is observed. This significantly shortens the life of provision of the mining and metallurgical sector of Kazakhstan with reserves. To solve this problem, it is necessary to ensure the faster development of geology. The below-listed factors are seen as a priority in this work.
First, it is necessary to replenish the mineral resource base. The scope and direction of geological operations should take into account the need for particular types of minerals for socio-economic development of the regions and the country's economy as a whole. Taking into account the growing needs for these from the industries and the increased global demand for some raw materials, the government and mineral producing companies need to invest by involving domestic and foreign sources of investment in replenishment of mineral resources, creation of new promising productions, development and replenishment of the national mineral resources. This approach would ensure the sustainability and competitiveness of Kazakhstan's economy in the long run.
Second, we need to improve the legal framework with the purpose of removing existing barriers, increasing the investment attractiveness of the geological sector, and developing a favorable environment for the application of innovative technologies in the field of exploration.
Third, we should focus on the creation of technological research and professional centers in the sector of geology. This will improve the quality of the exploration, since the experience will be supported by the introduction of innovations. The important issue is also the training of specialists which will have the appropriate knowledge and competence to carry out technical support, maintenance and repair of modern equipment. The establishment of training and retraining centers will address the issue of shortage of professionals in geology area.
Extractive Industries Transparency Initiative
One of the major tasks outlined by the President in his Address to the People of Kazakhstan "Kazakhstan's Path 2050: The Common Goal, Common Interests, and Common Future", is the implementation of a new anti-corruption strategy. It aims to increase the independence of local governance while strengthening their liability for results and the accountability to the public.
In many respects, the Extractive Industries Transparency Initiative (EITI) serves this purpose. This initiative is being implemented in Kazakhstan on the initiative of the President since 2005. The result of the hard work over the 8-year period was the successful passing by Kazakhstan of a validation procedure for the EITI in 2013. EITI International Board was given the highest rating to Kazakhstan in its meeting the EITI requirements and assigned to Kazakhstan the status of "EITI Compliant."
To support the EITI, the relevant regulatory framework was created. In particular, relevant amendments were made to the Law on Minerals and Mineral Production, where the liability of mineral producers as to their compliance with the terms of the Memorandum of Understanding on the EITI were specified. To coordinate the objectives set in the EITI, the National Council of Interested Parties chaired by the Minister of Industry and New Technologies Asset Issekeshev was set up and is operating.
To maintain the assigned status, the annual preparation of the national EITI reports will be made, and other important events of the post-validation period as per the Plan of Actions on Implementation of the EITI will be conducted. The national reports will include not only a reconciliation of taxes to the national budget from the extractive industries, but also more advanced coverage of the data in accordance with the new international standards. This list includes the contextual information that provides an overview of the extractive industries, their legal framework and fiscal regime; a brief description of some industries, data on their contribution to the economy and production volumes; the information on participation of the state in income distribution, the license registries and the issuance of licenses, and the information on beneficial ownership and contracts.
Great achievement in implementation of the EITI in Kazakhstan is the possibility for the mineral producing companies as the taxpayers to produce the reporting on the EITI via the electronic website of the Integrated Information System “The Unified State System for Administration of Mineral Production in the Republic of Kazakhstan". Reconciliation with the data of the Ministry of Finance as the recipient of taxes is carried out in an automatic mode, and reports on its results, including disaggregated information on every company, are available to all interested parties online.
Elvira Dzhantureyeva,
Head of the Service for Mineral Resource Base Analysis
and Transparency of Extractive Industries of the National Center
for Geological Information "Kazgeoinform" under the Geology and
Mining Committee of the Ministry of Industry and New Technologies
of Kazakhstan, PhD in Technical Sciences.
