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Mining Survey. Immense Plans
Steel and ferrous metals production
According to the Statistics Agency, in the first eight months of 2008 Kazakhstan produced 316,267 tonnes of raw steel, which is 0.8% less than the same period in 2007. During this time we produced 2,155,773 tonnes of flat rolled metal – which is 92.5% of the level of production in January-August last year – including 139,214 tonnes of tin and tinned flat (92.8%), and 387,411 tonnes of galvanised rolled metal (95.4%). The production of ferrous alloys amounted to 1,159,409 tonnes (102.3%).           
Precious and non-ferrous metals production
In January-August 2008, the country produced 5,459 kg of refined gold (102.4%), and 415,829 kg of refined silver (84.7%). It also produced 1,136,668 tonnes of alumina and 244,248 tonnes of unwrought zinc (101.9%). At the same time, the production of refined copper bars, apart from products that have been sintered, rolled, extruded and forged, decreased to 252,835 tonnes (93.7%). The amount of lead produced in the form of lead concentrate dropped to 25,100 tonnes, and of zinc in zinc concentrate to 251,000 tonnes (99.6%).            
Coal production
Over the first eight months of 2008, the country produced 70,881,400 tonnes of coal, a 17.9% rise against the figures from the same period last year.
New tax rates on metal mining 
The new Tax Code, which has been tabled for parliamentary discussion, has defined tax rates for the mining of basic metals (TNRP – tax on natural resources production). The following rates have been fixed: copper – 8%, zinc – 9%, lead – 8.5%, aluminium – 0.3%, tin and nickel – 6%, gold, silver, platinum and palladium – 5%.     
In addition, Astana has fixed the tax rates for ferrous, non-ferrous and radioactive metals mining. They will be 17% on chrome ore, 3% on iron, and iron with manganese, 3.5% - iron ore concentrate (rolled briquettes), 15% uranium (oxide).      
The tax rate on mineral raw materials containing chrome, titanium, magnesium, cobalt, tungsten, bismuth, antimony, mercury, arsenic and other metals is fixed at 6%, and on those containing vanadium at 4%.  
On raw materials containing lithium, beryllium, niobium, tantalum, zirconium, yttrium, strontium, and gallium – 7.7%.         
On materials containing selenium, tellurium, molybdenum – 7%; on those containing scandium, germanium, rubidium, cesium, cadmium, indium, thallium, hafnium, rhenium, osmium and others – 6%.  
On materials containing radioactive metals, such as radium, thorium, and others – 5%. 
On raw materials containing black and brown coal, and pyroschist – 0%; on those containing black coal for export – 2.51%; phosphorites – 4%; boric oxide – 3.5%, barite – 4.5%; talc – 2%; fluorites – 3%; wollastonite – 3.5%; schungite – 2%; graphite and others – 3.5%.    
On raw materials containing precious stones, such as diamond, ruby, sapphire, emerald, garnet, alexandrite, red (noble) spinel, euclase, topaz, aquamarine and others – 12%.   
On raw materials containing semi-precious stones, such as nephrite, lazurite, radonite, charoite, malachite, aventurine, agate, jasper, pink quartz, dioptaz, chalcedony and others – 3.5%.      
On raw materials containing diamond, corundum, agate, jasper, serpentinite, zirconium, asbestos, mica and others – 2%. 
At the same time, Kazakhstan’s experts say that imposing a tax on mining operations will reduce the competitive capacity of the domestic mining companies. Thus, according to Ms Tamara Solovyova, Vice-President of the Sokolov-Sarbai Production Asssociation (SSGPO), “we cannot compete with our rivals from Russia and China. This is because of the difficult mining and geological conditions in our country, and taxes such as TNRP which increase production costs at SSGPO by 15-20%”. She made this statement at the round table The New Tax Code: Opportunities and Dangers for the Growth of Business, which was held in Astana on 15 September, 2008.     
The representatives of the Ministry of Finance and the Ministry of Economy and Budget Planning, tax authorities, parliamentarians and managers of industry associations took part in this discussion organised by the information agency Interfax Kazakhstan.     
According to Ms Solovyova, the expected substitution of TNRP for the existing royalty scheme will lead to a tenfold increase in the amount the company pays as taxes. “Our biggest problem is that in order to stay in the market, our enterprise will have to seek means of lowering production costs. Therefore, we will have to lower wages, reduce staff, and abandon our social programmes”.     
In addition, she believes that the new system of excess profit tax charge “casts doubt on the implementation of all investment projects that have been accepted and that are being developed” at the enterprise.    
In his turn, Mr Daulet Yergozhin, Vice-Minister of Finance, who participated in the round table, said that, in the course of development and discussion of the Tax Code, the experts considered many of the suggestions made by the subsoil users. This allowed them to reach consensus on many questions and on the question of tax rates as well. “I think that as the subsoil users took part in the calculations we made, as well as in the development of the Tax Code draft, we considered many of their suggestions. I think we have found some balance here,” explained Mr Yergozhin his position. “Yes, the tax rates have become 10 times higher, but we have lowered your corporate income tax rates and balanced out value-added tax, so that the ultimate tax indices have changed only by 2%.”                
Astana is preparing a new subsoil law
In October 2008 the Government of Kazakhstan is going to submit to Parliament the draft of a new version of the law On Subsoil and Subsoil Use in the Republic of Kazakhstan, which will be united with the current law On Oil. Therefore, if adopted, the latter will no longer be in force. In addition, the new version of the law On Subsoil will make the conclusion of production sharing agreements (PSA) unnecessary.    
According to Mr Askar Batalov, Executive Secretary of the Ministry of Energy and Mineral Resources, numerous additions and amendments made to Kazakhstan laws on subsoil use in the last few years resulted in the adoption of several incompatible regulations. Some of these contradict other regulations that had been already in force, which resulted in judicial collisions. Consequently, it infringed the interests of the state as well as of the investors. That is why the Government entrusted the Ministry of Energy with the task of updating the current law on subsoil use. According to Mr Batalov, they will submit their draft to Kazakhstan’s parliamentarians as early as in October this year.      
According to the Ministry of Energy spokesman, the additions and amendments that will be made to the laws in the future, will not affect the contracts which had been signed before their adoption. There is one important clause, however: the amendments and additions worsening a contractor’s terms that were adopted after the contract had been signed will be valid for every contract if they concern the questions of defence, national and ecological security and public health.  
And although that clause exists in the current laws, it has never been applied before, which, according to the Ministry of Energy spokesman, has ensured stability in the relationships between the state and investors. 
The customs says “all right” so far
Apparently, the Government of Kazakhstan is not planning to introduce export customs duties on metals in the years 2008-2009. Mr Bakhyt Sultanov, the Minister of Economy and Budget Planning made an official statement to this effect in Astana on 8 September.   
Remember that in April this year, the Government voiced its plans to introduce export duties on mining and smelting products before the end of 2008. Then this measure was justified by the need to increase budget income.         
Who’s next?
On 12 August 2008, the Ministry of Energy has announced a tender for a number of mining plots and mineral deposits. Thefollowingbids have been announced
·  the manganese ore deposit East Karazhal in Karaganda Oblast (exploration and mining);
·  the complex ore deposit Chekmar in East Kazakhstan Oblast (exploration and mining);
· the Butachikhinsk-Kedrovsk block in East-Kazakhstan Oblast, with non-ferrous and precious metals prospects, except searching for placer gold);
·  the Sakharovsk-Adayevsk plot in Kostanai Oblast, with non-ferrous and precious metals prospects (exploration);
·  the Karabaital plot of non-ferrous and precious metals in Kostanai Oblast (exploration);
·  old waste dumps OF Nos.1,2 of Zhezkazgantsvetmet in Karaganda Oblast (exploration and mining of copper).
As the Ministry of Energy has said, the investors willing to take over the deposit East Karazhal are obliged to start manufacturing ferrous alloys and steel-smelting products by 1 January 2010, including the construction of furnaces for producing ferrous alloys and steel-smelting furnaces. The annual production volumes must not be less than 100,000 tonnes. In addition, they must start producing electrically calcinated anthracite with an annual volume production of 18,000 tonnes and more. 
As for obtaining the right for subsoil use on the waste dump, the investors must build a plant to produce 10,000 tonnes of flat cathode copper per year, with the use of high technology, and to put it into operation before 1 June 2009.  
On all the sites, the Ministry of Energy demands that the construction of a copper works and an electrolysis works must begin there. Their annual production capacity must not be less than 70,000 tonnes of cathode copper. These plants must be put into service before the beginning of 2010, and reach their full capacity in 2011.    
A question arises: who in Kazakhstan can currently make these bids? The answer seems quite clear.   
Human resources are crucial
On 22 August, in Rudny, Kostanai Oblast, the International Labour Forum State and Private Partnership for Competitive Development of Human Resources was held on the basis of SSGPO, which is a part of ENRC PLC holding company. President of Kazakhstan Nursultan Nazarbayev took part in the forum.  
The problems and perspectives of the development of a training system for skilled personnel for Kazakhstan’s economy have become the main subject of the forum. Managers of central and local government bodies, representatives of big business, parliamentarians, and well-known public figures took part in the forum. For the first time in recent history they raised the problems of professional training of personnel for domestic plants, considered the experience we have and the prospects of providing mining companies with highly-qualified specialists.  
Mr Nazarbayev noted in his speech that the high rates of economic growth brought about considerable changes in the labour market structure, as well as an increase in demand for skilled labour. Currently, the shortage of skilled line personnel hampers the rates of industrial growth and competitive ability of Kazakhstan’s economy.    
The Government had acknowledged the importance of this problem, and began to make its first steps in that direction. Thus, the Government has adopted the Technical and Vocational Education Development State Programme for the years of 2008-2012. Its objective is to modernise the whole technical and vocational education system. More than 55 billion tenge has been assigned from the country’s budget for the implementation of the first stage of the Programme.     
The managers of the biggest mining and smelting enterprises of the country have supported the proposal the head of Kazakhstan made. Thus, according to Mr Felix Vulis, the President of the ENRC Management KZ Company, “today the society is aware of the extreme necessity of creating a professional training system. The market is in bad need of skilled labour; this is the main condition for the economy, business and the society as a whole to develop successfully”.   
As a result of the forum, Mr Zhanseit Tuimebayev, the Minister of Education and Science, Mr Berdibek Saparbayev, the Minister of Employment and Social Security and Mr Azat Peruashev, the Head of the National Economy Chamber Soyuz Atameken have signed a national pact on the development of domestic specialists with high levels of competitive abilities. This was done to combine efforts in solving the problems of professional training. The document defines the tasks on creating in Kazakhstan a national qualification system on the basis of state and private partnership. Memoranda and treaties are going to be signed between educational bodies and enterprises-employers on training skilled labour in every region.   
The parties are intending to create suitable conditions for using, in the first place, domestic human resources, for it will be the citizens of Kazakhstan who will work in the country on continual basis. Highly-qualified foreign specialists will be invited in cases where there is economic need, and will be regarded as a way of attracting new knowledge, experience and technologies to Kazakhstan.            
Company news
After buying 35,734 millions of ENRC shares at ₤11.26 each (the London Stock Exchange closing price) on 8 August 2008, Kazakhmys Plc has increased its share in ENRC up to a blocking share holding. So, Kazakhmys’ share in ENRC has reached 322,178,000, or 25.02%. The previous Kazakhmys share in ENRC was 22.24%, including shares purchased from the Kazakhstan Government at the end of July.  
ENRC have consolidated the assets of a number of companies, such as Kazchrome, Aluminium of Kazakhstan, Kazakhstan Electrolysis Plant, Zhairem Mining and Concentration Plant, SSGPO, EuroAsian Energy Corporation, as well as ENRC Logistics and Marketing & Sales. ENRC had previously purchased Serov Ferrous Alloys Works (Russia) and Mineracao Limitada (Brazil). In addition, the group announced the purchase of 50% shares in the Xinijiang Tuoli Ferro-Alloy Co. Ltd at $14.5 m.
In 2005, Kazakhmys Corporation, the biggest copper producing company in Kazakhstan, placed its stock at London Stock Exchange on behalf of Kazakhmys Plc Holding Company, registered in Great Britain and including oil, gold-mining, and power-producing subdivisions, and MKM plant in Germany. Kazakhmys produces refined copper and copper raw materials, other non-ferrous and precious metals and coal. The Corporation includes four production associations: Zhezkazgantsvetmet, Balkhashtsvetmet, Vostoktsvetmet, and Karagandatsvetmet.
The overburdens of Donskoi GOK are to be used in the building of Aktobe-Orenburg-Kazan high-speed highway.
The delegation from Kazakhstan’s social and business corporation Batys and representatives of the Russian building industry enterprises association considered this possibility during their meeting in Orenburg on 5 August. 
The parties have agreed to sign a memorandum during the forthcoming meeting of Russian and Kazakhstan’s leaders of bordering oblasts. The memorandum is expected to provide for introduction of non-metallic raw materials processing technologies, developed by Moscow research institutes and used in building materials production.
According to experts, Batys’ participation in the expected building of the Aktobe-Orenburg-Kazan high-speed highway as a part of the Western Europe-Western China International Traffic Corridor, which is currently being formed, makes the question particularly relevant.
Moscow scientists’ technologies provide for the use of serpentinite minerals, rich reserves of which are placed in Aktobe Oblast, particularly in the overburden waste dumps of Donskoi GOK.
In addition, during the meeting the parties discussed the questions of joint kaolin processing and concentrating, and of Batys’ participation in the environmental revival of the Ural River basin.
On 9 September, Batys concluded a treaty with the power engineering and utilities services management of West Kazakhstan Oblast on the production of mortar sand in Zelenovsky District, and the production of raw materials for bricks in Borlinsky District. Batys is supposed not only to produce and process kaolin, but to manufacture ceramic brick. After production has completely started, more than 80 job places will be created. By the end of 2009, Batys is planning to implement two more projects of this kind, which will supply the building companies in the region with brick and sand.  
The Tobol Company and Safin Handlesges Company (Austria) are implementing a joint project on the production and processing of iron ore in Lomonosov and South Lomonosov ore deposits in Kostanai Oblast. Tobol’s share in the project is 25%.
This project provides for building an ore-dressing and processing enterprise with a capacity of 23 million tonnes of iron ore per year. The completion of the project will make it possible to produce 10 million tonnes of iron-vanadium concentrate annually. In addition, the project includes the construction of a shop, producing metallised rolled briquettes with iron content reaching 85-90%.
A highly productive conveyor transport will be used in the production of iron ore. This will make it possible to produce ore with the help of an open-cut method from the depth, which was considered to be out-of-rich before. Thus, the Lomonosov ore deposit will be the deepest one not only in Kazakhstan, but also in the CIS. The realisation of the innovative ore production technique in Kostanai Oblast will make it possible to use it at other deposits, which will make the domestic mining industry much more attractive in general. Safin Handelges is planning to invite the British company SRK Consulting for the analysis and confirmation of the ore reserves, and Finnish Mestro Minerals to select technical equipment.
The ArselorMittal Temirtau Company is planning to curtail its production down to 3.8 million tonnes, as compared to 4.2 million tonnes in the last year. This was forecasted by Mr Frank Pannier, CEO of the enterprise.
At the same time, he said that about $500m will be invested into the modernisation of ArselorMittal Temirtau production this year. About $200m of this sum will be invested into the renewal of the technical equipment in Temirtau’s plants, and $276m in Karagandaugol Plant.
Mr Pannier reminded about the company’s plans to increase metal production up to 10 million tonnes by 2013, and informed of the Company’s intention to expand the existing raw materials base. According to his estimation, “the development of the ore reserves in Karazhar may give up to 10 million-12 million tonnes in the years of 2013-2014.” In addition, the company has proposed to construct a new coal mine next to the Tentekskaya mine that is supposed to be put into operation in 2013-2014.
The Kazakhstan company Kazphosphate is planning to make net profit of about $62.4m compared to $8.4m in 2007. 
On 9 September Mr Bolat Sautbayev, Vice-President of Kazphosphate said that such growth would result from the expected increase in company sales, and a favourable price situation in world markets.  
Thus, in 2011-2012, Kazphosphate is intending to raise its annual sales up to $1bn. In 2008, the expected sales volume is about $385m-400m. The company is going to achieve this growth by expanding existing production capacity, and by putting new ones into operation. For example, the production capacity on ammophos fertiliser is expanding, and this will allow the company to produce 350 million-360 million tonnes of it annually. In addition, Kazphosphate is considering the expansion of the production of phosphoric acid up to 70,000 tonnes per year.            
The principal activities of Kazphosphate are carrying out geological exploration, production and processing of phosphoric ore, production and sale of yellow phosphorus and its derivatives, of phosphoric mineral fertilizers and fodder phosphates, manufacturing of mineral-based products. The markets of Eastern and Western Europe, of China and CIS countries, as well as the domestic market are supplied with the produce of Kazphosphate.                
“We have a wide range of products: for example, that very ore which we sell to Central Asian producers. Producers from Russia have also shown interest. They have just bought a few trial batches. They want to find out in what ways our ore can be used to produce phosphoric fertilisers,” says Mr Sautbayev. In addition, Kazphosphate is intending to build a concentration plant with a processing capacity of about one million tonnes of phosphoric ore. The estimated cost of this project is $250m.   
In general, in the years of 2009-2012, the company is planning to invest about $800m in its development. Apart from the expansion of production, these investments will be aimed at expanding their fleet of trains. Forexample, thecompanysuggestspurchasing 290 newrail tank cars.    
According to Bolat Sautbayev’s explanations, the expected $800m investments will partly come from the company’s own funds, and partly from the attracted capital.  

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· 2015 №1  №2  №3  №4  №5  №6
· 2014 №1  №2  №3  №4  №5  №6
· 2013 №1  №2  №3  №4  №5  №6
· 2012 №1  №2  №3  №4  №5  №6
· 2011 №1  №2  №3  №4  №5  №6
· 2010 №1  №2  №3  №4  №5/6
· 2009 №1  №2  №3  №4  №5  №6
· 2008 №1  №2  №3  №4  №5/6
· 2007 №1  №2  №3  №4
· 2006 №1  №2  №3  №4
· 2005 №1  №2  №3  №4
· 2004 №1  №2  №3  №4
· 2003 №1  №2  №3  №4
· 2002 №1  №2  №3  №4
· 2001 №1/2  №3/4  №5/6
· 2000 №1  №2  №3

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