The Mining Industry in Kazakhstan

Mining and metallurgy are two of Kazakhstan’s key industries, accounting for over 9% of GDP and circa 18% of total industrial production. The national mineral and resources base consists of 5,004 fields with a net worth of US$46trillion.

About 80% of all mining industry products are exported to over thirty countries worldwide, representing 20% of total exports and 30% of the country’s annual revenue. In 2012, the volume of metallurgy production amounted to nearly US$13billion - including ferrous metallurgy of US$4.7billion and non-ferrous metallurgy of US$8.2billion.

Kazakhstan is ranked sixth in the world in terms of estimated mineral resources. Out of the 110 elements in Mendeleyev’s periodic table, 99 have been discovered, 70 explored, and 60 are being extracted and used in Kazakhstan.

Specifically, Kazakhstan has 30% of the global reserves of chrome ores (the second most in the world), 25% of manganese ores and 10% of iron ores. Wolframium reserves represent 60% of the global total (the largest globally), bauxite 30% and phosphorite 25% (second place in the world). The country also has the largest reserves worldwide in terms of lead and molybdenum and ranks eighth in terms of total ironstone reserves (16.6billion tonnes).

Kazakhstan is the world’s largest uranium producer (33% of world output in 2010, USGS), as well as having extensive coal, gold and manganese reserves. Kazakhstan also ranks third in the world in terms of titanium production, seventh for zinc, eighth for lead, thirteenth for iron ore, fifteenth for copper and thirty fifth for steel.

In 2010, to support the further development of the mining and smelting industries, the government approved the Mining-Smelting Industry Development Program 2010-2014. The program aims to foster the rational and optimal use and development of the country’s mineral resources through the production of high-technology and science-intensive finished products. A 107% growth in gross value added for metallurgy products is anticipated.

Currently, the Industrialization Map of Kazakhstan includes 61 mining and smelting industry projects, representing investment of KZT1.5trillion (US$10.0billion). In 2011, eleven projects brought the economy KZT52.7billion (US$351.9million) and 2,700 new jobs. The implementation of these projects contributed to an increase in the production of base metals, further development of low-tonnage production, growth in the production of high-technology products and a significant expansion of exports. The new jobs created have helped improve the situation on the labour market.

The government has initiated significant measures to support the expansion and optimisation plans of the country’s largest mining and smelting companies. Comprehensive modernisation plans have been introduced for six strategic enterprises (Aluminium of Kazakhstan, SSGPO, TNK Kazchrome, “Kazakhmys”, Sat & Company and Kazphosphate). With input from joint ventures with private sector partners, a volume of investments into the industry by 2015 of KZT1.72 trillion (US$11.5 billion) is anticipated, which should lead to a further 3,000 or more new jobs created in the sector.

The government has also implemented systematic measures to support small and medium-sized businesses active in the industry. In 2011, within the framework of its "Road Map for Business – 2020", the state approved 782 applications for loans worth KZT2385 billion (US$1.6billion), including loans to 101 mining and smelting projects amounting to KZT52.6billion (US$351.2million).

Kazakhstan recently achieved “compliant country” status with the Extractive Industries Transparency Initiative ("EITI") with regard to observing international standards of revenue transparency in the extractive industries.

This represents a significant development as acquiring EITI compliant status should catalyse a number of positive changes within the industry, including an increase in budget revenues, greater attractiveness to foreign investors and a boost to Kazakhstan’s international image.

Currently, Kazakhstan’s mining industry is dominated by both national giants as Kazakhmys, ENRC, Kazatomprom, Kazzinc, and leading international mining groups such as RioTinto, BASF, Endress+Hauser, ArcelorMittal, Areva Group, Uranium One Inc., Central Asia Metals Plc and Hambledon Mining Plc.

More detailed statistics on precious metals and mining in general can be found on the Embassy’s web-site: http://www.kazembassy.org.uk/mining_industry.html

This summary was jointly produced by the Embassy of the Republic of Kazakhstan to the United Kingdom and the New Silk Road Forum (www.nsrforum.com).