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GOVERNMENT & BUSINESS   Karaganda Region. Reliance on subsoil and industry 
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Karaganda Region. Reliance on subsoil and industry

Karaganda region has always attracted investors due to its high industrial potential and rich mineral and raw materials base. However, according to Deputy Akim of the region Anuar Akhmetzhanov, not less opportunities for business lie in the development of off-balance mineral reserves and technogenic mineral formations.

Anuar Muratovich, what are the current indicators of social and economic development of the Karaganda region?

By the results of the first quarter of 2016, the specific gravity of our region in the total volume of industrial production in Kazakhstan is 10.3%. On this indicator Karaganda region ranks second after Atyrau region. Moreover, we are the leader in the manufacturing industry. Only since the beginning of the year, our  processing companies produced 319.9 billion KZT more, it’s about 20.2% of the national indicator. In fact, thanks to the powerful production opportunities and projects of the Map of industrial development, our processing is ahead of all indicators regarding the mining industry. For example, only last year, it grew up by 10.4%.

At the same time, the region has rich raw materials base, and therefore the new, unique projects in the field of subsoil use are implemented. In particular, in the Karkaraly district in the near future an innovative mining and concentration complex “Koktaszhal” will be launched, which was initiated by the company Altai Polymetals. 

 

And with what results the region completed the first year of the second five-year plan of the industrialization?

The participation in the State program of industrial-innovative development, in which the main attention is paid to the manufacturing industry, that became one of the key tools in stimulating the economy of our region. After all, the Karaganda region specializes in siderurgy and non-ferrous industry, production of chemicals for the industry, manufacturing of machinery for the mining sector, electrical equipment, construction materials, foodstuffs.

Thanks to the State program of industrial-innovative development, in the region 69 companies have been already set in operation, 59 of which during the first five-year plan of the program. We continually monitor the work of these companies, try to help with marketing and sales of their products. Investments in these projects since the launch of the State program were about 130 billion KZT, another 10 projects amounting to 101 billion KZT will be launched this year.

Of course, activities of some new facilities were hampered due to the disparity of the exchange rate of KZT and RUR. Because of the high competition, companies experienced difficulties with sales. However, last year 90% of companies worked out in accordance with the plan. And now, when the exchange rates are ajusted, the problem is removed.

From the other side, due to the sanctions and overproduction in Russia, our metal-workers and coal miners have lost a market share. But now, they have a new export direction - Iran. For example, such company as JSC ArcelorMittalTemirtau actively enters the market.

When talking about the development of SME, there are now 86 thousand small and medium-sized enterprises  in the region, and only during the last year their number increased by three thousand. This sector employs 233 thousand people, or 30% of the economically active population. You agree, that it’s good for industrial region. The volume of products manufactured in the SME sector is about 700 billion KZT. It’s comparable to the volumes of our industrial flagships - corporations Kazakhmys and ArcelorMittalTemirtau.

In general, large companies operate stably, and overall production growth comes through the new businesses including also those opened in the framework of the State program of industrial-innovative development. In any district, city we have at least one project that is implemented in the framework of the Map of industrial development.

 

Among the launched and planned investment projects what projects are significant, taking into account the priorities of industrialization?

All the projects that we have implemented are quite interesting. The specificity of the Map of industrial development of Karaganda is that we don’t have projects initiated by the State. Almost all the industrial-innovative enterprises are created at the initiative of private entrepreneurs. Only two of them are implemented by the National agency for technological development. When it comes to the amount of investments, both small projects amounting to 500 million KZT averagely and large projects designed for hundreds of millions USD. For example, ArcelorMittal Temirtau implemented several capital-intensive projects - it’s the reconstruction, modernisation of two blast furnaces, the introduction of the exhaust gas purification system in the converter shop, as well as the project of air separation of the German company Linde Gaz Kazakhstan. The volume of oxygen consumption in the metallurgy is very large, so units for the production of oxygen, argon and nitrogen were built in the plant. The company not only sells these gases in the country, but also exports abroad.

There is another promising area. In the Karaganda region there are huge stocks of technogenic mineral formations - dumps, slags, mill tailings, which can be also processed. In this area there are already two projects in Balkhash. The first one is the hydrometallurgical plant producing cathode copper based on Kounrad mine dumps of the company Sary-Arka. Recently, the capacity of this unique enterprise launched in 2012 with the participation of the head of State was expanded from 10 thousand up to 15 thousand tons of copper. Another Balkhash-based company - Iron Concentrate Company LLP produces about 60 thousand tons of iron concentrate from copper flotation tailings of Balkhash enriching plant. Arcelor and some Chinese companies are interested in products of ICC.

Kazakhmys corporation actively implements hydrometallurgy at its Zhezkazgan production site. This will involve refinement of ore with low copper content and reduce production costs. Now, a new technology is used in the experimental area, and if it approves itself well, it will be possible to transfer the entire plant.

Investment projects are implemented in the field of energy. Recently, at the Karaganda TPP-3 a new electrical power unit with a capacity of 110 megawatts was put into operation. At the first stage of expansion program of the station a turbine unit is launched, which successfully continues to work.  China National Engineering Corporation in the field of mechanical engineering - CMEC has become the general contractor and equipment supplier.

Concerning the construction industry, the JSC Kazcement launched fifth production line of cement using dry method in Aktau village. This will increase enterprise’s productivity and reduce energy consumption. The house building factory LLP KKK Beton is set in operation in Saran. The company has already designed and supplied one large panel energy-efficient residential house. This is a very promising trend: firstly, the panels are made with thermal insulation; secondly, using German technology, nine-storey residential house can be built in just three months.

Mechanical engineers actively “move”. In 2014, modernisation of the Karaganda foundry-engineering plant owned by the corporation “Kazakhmys” started. It is planned that after implementation of the project, which is included in the Map of industrialization, new engineering products will be mastered, in addition the corporation will be able to increase the level of local content in its industrial procurement.

We also develop service direction. For example, LLP JV KazBelAZ will not only do assembly work and sell new machines, but also provide their maintenance service. LLP BorusanMakina Kazakhstan has achieved great success in this field: on the basis of its service center in Karaganda, they opened the Centre for restoration of the Caterpillar equipment spare parts. This is very relevant for our large mining companies. It is very important to timely perform diagnosis, restore key parts and units and thus reduce the cost of purchasing of new spare parts.

 In the mining-and-metals production complex I can note the gold processing factory JSC AK Altynalmas with the performance of 2 million tons of ore per year, which was launched in December 2014 in the Aktogai district. The investor was able to find the right technology, and last year the company produced 2.5 tons of alloy “Dore”, which was sent to the refinery in Astana. It’s also a successful project, an additional in-mine exploration is carrying out there now.

 

What are the challenges that mining industry faces in the region?

Our mining and metallurgical enterprises are a full-cycle productions since all the raw materials base is located on the territory of the region. In general, siderurgy and non-ferrous metallurgy are the basis of the region’s economy. Today, companies in this industry are in quite a difficult situation. In early 2000s, Karaganda supplied steel products in China in large volumes. But if the Celestial Empire produced about 100 million tons of steel at that time, today it’s about 800 million tons. The Chinese have developed their own production, and now they supply metals not only to their businesses, but send them also for export. Last year was a difficult one, prices collapsed. If the price of cathode copper of Kazakhmys reached $11 thousand per ton, today it’s only $4 900. Almost twice - up to $300 the price of ferrous metal from the Arcelor line has dropped in 2015. Manufacturers try to find a way out of the situation,  by using new technologies, improving energy efficiency, in order to reduce the production cost. For example, if now one ore heat-treating furnace at Zhezkazgan copper plant consumes hundreds of megawatts of electricity, so hydrometallurgy will significantly reduce these costs. Over the long term in the mining and smelting sector we need to ensure the investment projects aiming at better processing and improving the competitiveness of enterprises.

For reference. The mainstay of the Karaganda region is a miningand manufacturing industries, which produce more than 46% of GRP of the region. In the region there are significant reserves of ferrous (3), non-ferrous (29) and precious (2) metals, 84 kinds of minerals, as well as energy resources: gold - 2.5% (of world reserves); silver - 14%; copper - 2.1%; lead - 1%; zinc - 14.7%; nickel - 1.4%; cobalt - 3.5%; bauxite - 1.2%; iron- 5.8%; manganese - 9.7%; chromium ores - 35%; barytes - 15%; phosphorites - 4.5%.  The geological potential of the Karaganda region in identifying new mineral deposits is high enough.  The forecast reserves of copper are estimated to 30 million tons (Zhezkazgan, Karaganda and Karkaralinsk ore districts), of gold - 600-1000 tons, of lead - 21 million tons, of zinc - 23 million tons. Concerning hydrocarbon fields, South-Western and North-Western areas of the region are promising. The basis for the manufacturing industry is ferrous and non-ferrous metallurgy, which is about 60% of the total industrial output of the region.

 

 

Anuar Akhmetzhanov

In 1996 graduated from Karaganda State University named after E.A. Buketov, 2000 - Johns Hopkins University, Washington (United States) on a speciality "Economist in international economic relations", Master’s degree in international finance and international relations. Fellow of the international scholarship of the President of the Republic of Kazakhstan “Bolashak”.

From 1996 worked as a lecturer at the Department of international economic relations of the Karaganda State University named after E.A. Buketov In 2000 - 2003 - senior analyst of the Strategic Planning Department, general manager of the Department of foreign economic relations, manager of the Department of the North Caspian project of CJSC NOC Kazakhoil. In 2003 - 2004 - deputy director, director of Project analysis department JS NC KazMunayTeniz. In 2004 - 2006 - deputy director, director of the Department of marine projects of JSC NC KazMunayGas. In 2006 - 2007 - chief expert of the oil assets management group of JSC Samruk-Kazyna. In 2007 - 2010 - executive director for oil exploration and production projects, general manager of JSC NC KazMunayGas. In 2010 - 2012 - first deputy general director of LLP JV KazGerMunai”.

From February 15, 2012 appointed as a Deputy akim of the Karaganda region for industry, SME development, industrialization and investment.






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