TBY talks to Özgür Günaydýn, General Director of Borusan Makina in Kazakhstan, on local demand for heavy earth-moving, agricultural, and mining machinery.
TBY What is the background of Borusan, and what are its core activities in Kazakhstan?
OZGUR GUNAYDIN Borusan is an international Turkish-based company. It was established 60 years ago and its original focus was on tube manufacturing. Since then the group has diversified into fields such as steel, automotive distribution, logistics, mining, and energy. Borusan operates in Turkey, Azerbaijan, Georgia, Kazakhstan, and Kyrgyzstan. In Kazakhstan around 75% of our operations are in mining. A further 10% is in infrastructure construction and the distribution of Caterpillar equipment, agriculture constitutes 10%, and power systems the rest.
How is Borusan positioned in the markets it is present in?
We are market leaders by far in the mining sector. We are market leaders in the construction business, and in the agricultural sector we are targeting to become the market leader. We are new to the agriculture sector in Kazakhstan, having entered this business just five years ago. Kazakhstan has a huge agriculture industry—7% of GDP comes from agriculture—and we see a lot of potential. In terms of the equipment needed in that sector, it is almost equal to mining.
How have global fluctuations affected your mining operations here in Kazakhstan?
Our mining business was affected. However, the strength of our customer support business saw us pass through the crisis relatively well. We sell our equipment 24/7, all year round. This creates a huge market for us. We have a 40% share in mining equipment sales here in Kazakhstan, and we have a market share of 75% in product support. There may be some fluctuations in the market, but our domination of the product support sector keeps us financially profitable.
What is your level of interaction with the oil and gas sector in Kazakhstan?
Chinese companies dominate the oil and gas sector in the country. There are also a lot of Western players from Italy and the US. Borusan provides engines to support drilling and marine operations. We also provide engines and generators that support the provision of electricity to isolated areas. Kazakhstan is investing a lot in oil and gas and is becoming a more and more significant global producer. It has one of the largest reserves of oil in the world, but the country is only the 19th biggest producer. This leaves a lot of room for investment, and thus creates business for us as our equipment is used in the construction of camps and oil fields.
What potential do you see for Borusan in the construction of infrastructure?
The Western Europe-Western China Highway is one of the biggest projects under development in 2011. The construction tenders started in 2010, one-third of the road tender has been completed, and recently another portion has been announced. In total it is going to be 8,500 kilometers long and will connect Europe to China, with 2,500 kilometers of its length passing through Kazakhstan.
There is a large Italian presence in the project, and those firms are all our customers. A lot of sub-contractors are also working on the development. The international aspect of the job means world-class equipment needs to be used. This presents us with a good opportunity to market our construction equipment. We are supplying excavators, track-type tractors, paving units, and much more. There are already several hundred pieces of Borusan equipment being used on the development of the highway.
What other areas of the economy do you see as presenting opportunities for Borusan?
Based on the government’s 2030 strategy, Kazakhstan will become one of the world’s most developed countries. To this end the government has announced plans to turn tourism into a leading sector over the next 10 years. The government is also investing in urban infrastructure like schools and hospitals, and we may have a chance to take part in these projects as well.
© The Business Year