THE RICHES BENEATH

Kazakhstan 2011 | INDUSTRY & MINING | REVIEW: MINING

Kazakhstan has joined the ranks of global mining giants thanks to a wide mineral and metallurgical base and significant domestic and foreign investment.

Serving as a traditional primary resource sector of the Kazakhstani economy, mining companies are having a field day in bringing into use the country's near countless minerals and metals. The mining industry currently accounts for approximately 27% of GDP, with around 90% of all products exported to over 30 countries—accounting for 35% of the country's total exports. Around $55 billion has been invested in the sector over the last decade, 15% of which was in prospecting. An overall further $52 billion is expected to be invested over the 2010-2015 period. Companies from China, Europe, India, Korea, Japan, Russia, and North America already have long-term presences in the Central Asian state, with Kazakhstani mining companies also making a splash on the world stage. In 2005 Kazakhmys was listed on the London Stock Exchange, while more recently, in 2010, Central Asia Metals raised $60 million on the small-cap AIM market in London.

Mining is currently carried out at 2,000 mines across the country, including prospecting at 132 mines, extraction at 1,213, and both activities at 641. According to industry statistics, the country has the world's largest reserves of uranium, chromium, lead, and zinc, the third largest manganese reserves, the fifth largest copper reserves, and is in the top 10 for gold, iron, and coal. Kazakhstan is also an exporter of diamonds.

PRECIOUS METALS

Kazakhstan holds 4% of the world's gold reserves, making it the seventh largest reserve in the world after South Africa, the US, Australia, China, Russia, Canada, and Indonesia. In output terms the country is in the top 20. The Vasilkovskoye Zoloto joint venture, the Bakyrchik mining enterprise, the Kazakhmys Corporation, Kazzinc, and the Kazakhaltyn mining company have the largest reserves, accounting for 52% of the country's total stock. There are 260 deposits currently known, with mining activities being carried out at 199. The Vasilkovskoye mine in Kazakhstan's northern region is the fourth largest gold mine in the world. Overall, there are 18 foreign firms, 48 local firms, and five joint ventures operating in the sector, with $1 billion having been invested, mainly in extraction, over the past decade. A major project, known as the Akbakaysky cluster, is also under development in the Zhambyl region. Advanced technologies are being implemented as part of the government's accelerated industrialization program, and the total cost of the venture is expected to come in at KZT8 billion. In addition to gold, silver reserves are located in 100 deposits, of which 60% are copper-lead-zinc deposits. In 2009, Kazakhstan increased its production by 7.1% over 2008 to reach 673,000 tons.

FERROUS & NON-FERROUS METALS

A significant producer of copper, Kazakhstan has invested $1.7 billion in the sector over the last 10 years. With reserves set to last up to 30 years, the country expects to be in the top 10 producing nations by 2015. Currently developing projects in Aktogay and Bozshakol, Kazakhmys “will increase Kazakhstan's copper output by over 50%", with each project requiring “around $2 billion of capital investment", according to Oleg Novachuk, CEO of Kazakhmys. In addition to copper, lead and zinc reserves are set to last 25 years, with over 85% exported to the Netherlands, Turkey, Italy, Ukraine, and China. Aluminum is also big business, with 20 bauxite mines registered.

Over the past decade investment in bauxite mining has totaled $394 million, mainly from domestic firms. With reserves to last 50 years, a $900 million investment has been made in the Kazakhstan Aluminum Smelter (KAS) by the Eurasian Natural Resources Corporation. Representing the largest ever private capital investment in the mining industry, KAS is expected to be a key element of the Kazakhstani aluminum cluster in the future. Further metals extracted across the country include nickel and cobalt, with $1 billion of investment attracted over the past year, and iron and manganese, with $1.7 billion attracted over the same time frame. The country also has the world's largest chromium deposits—one-third of the world's total—with an expected lifespan of 90 years. Currently producing 4 million tons of chromium ore a year, the figure is expected to grow to 9 million by 2015.

PHOSPHATE

A large phosphate center during Soviet times, new ventures are now beginning to put Kazakhstan back on the phosphate map. Leading the way is Kazphosphate, with a yellow phosphorus capacity of 120,000 tons per year and exports of 60,000 tons, mainly heading to Europe. The company now has an 80% share of the European market, and is looking to begin producing pesticides. Another major player is Sunkar, and through its extraction operations targets producing 2% of the world's fertilizer demand in the future. The majority of Kazakhstan's deposits lie in the Karatau basin. Total estimated reserves of phosphates put Kazakhstan in the top 10 list of countries that possess 90% of the world's total reserves.

URANIUM

In 2009 Kazakhstan became the world's largest producer of uranium, with just under 30% of the global total. With 15% of the world's total uranium resources, the country aims to produce 25,000 tons in 2011, and up to 30,000 tons by 2018. With the view to becoming a global uranium bank, the government wishes to supply 30% of the world fuel fabrication market by as soon as 2015. “Kazakhstan has consistently proven its commitment to nuclear non-proliferation and has many of the supporting factors to accommodate and host a nuclear fuel bank if and when it is created by the international community," Galymzhan Pirmatov, President of Cameco, told TBY. One of the largest uranium producers, Cameco accounts for 16% of global production. Founded in 1996, Katco is also a significant Kazakhstani producer. Working along the line from extraction to the production and export of yellow cake, Katco is also looking to further develop the value chain and looking at “creating a fully integrated fuel production system", Konrad Schauer, General Director of Katco, told TBY.