Kazakhstan 2017 | ENERGY & MINING | REVIEW: MINING

As public- and private-sector officials seek to stimulate growth in the mining industry, efforts are being focused on improving transparency across the industry.

The mining and mineral industry is one of the fastest-developing industries in Kazakhstan, and its large reserves of minerals of all varieties guarantee that the industry will be a major contributor to the Kazakhstani economy for the foreseeable future. Growth is strong and public and private sector officials are optimistic that it will persist.

While the mining industry has been growing in recent years, some market leaders are cautioning against excessively high spirits. In an interview with TBY, George Apostolopoulos, Regional General Manager of Atlas Copco, explained his views on the state of the market: “The mining sector is growing compared to the energy sector; however, unlike in 2010/2011, the current period is not a boom,” said Apostolopoulos. “Some believe it will take a number of years for it to be a boom again, though the sector is steadily picking up.” Apostolopoulos believes the best course for the market as a whole would be steady, stable growth, and this is what he foresees. “I personally believe we will continue to grow at this steady pace, though not at 'crazy' growth rates, and we may end this year with around 4-5% growth, compared to last year.” Many industry experts agree that this kind of steady, sustainable growth is likely to define market dynamics for the near to medium term.


Though Kazakhstan itself has no nuclear energy facilities currently online, it is the world's number-one producer of uranium. According to the World Nuclear Association, Kazakhstan produces over 24,000 tons of uranium a year and has 12% of the globe's uranium and 35% of the market's yearly supply. There are currently plans underway to develop a state-of-the-art pellet production facility that would allow the country to produce fuel pellets in addition to raw uranium, and observers hope that this will spur further development in the sector. There have been some indications that uranium demand may decline in the near term, however, and Kazatomprom, the state-owned uranium producer, announced that falling demand would likely prompt it to reduce production by 10%, a figure representing a staggering 3% of the global total. China represents the majority of uranium exports, but Russia, Japan, India, and South Korea are also major trade partners.
In an interview with TBY, Yerzhan Mukanov, Managing Director of Kazatomprom-SaUran LLP, discussed the impact falling prices have had on the company, noting that it has responded by working to reduce costs. “We have implemented a program of effectiveness, reducing energy and reagents consumption, optimizing organization structure and business processes, digitalizing, improving productivity by implementing the digital mine, strong budgeting, and precise planning.” Mukanov is confident that these efficiency measures will cut costs, bolstering the firm's bottom line while preparing the company for the future.


Coal is key piece of Kazakhstan's mining industry and a major driver of activity in the country's economy. With almost 4% of the world's total proven reserves, the country contains 21,000 million tons of anthracite and bituminous coal and 12,000 million tons of sub-bituminous and lignite coal. Coal is a major fuel source for the country's domestic energy production needs as well as its iron and steel industries, but it also exports a great deal. In 2015, the country produced 45.8 million tons, measured in millions of tons of oil equivalent, and consumed nearly 33 million tons. Production figures have been rising, and according to the Ministry of Energy Kazakhstan produced 101 million tons of coal in 2016. Ukraine and Russia represent the country's largest export markets, though some efforts are being made to more seriously diversify export destinations in order to better insulate the industry from soft demand in those two countries. Kazakhstan has more than 400 coal deposits across the country, but a large percentage of all the country's mining activity is located in the Karaganda Basin and the Ekibastuz Basin. The two basins account for much of the coal direct toward energy production and the steel and iron industries, and according to the World Energy Council, the Ekibastuz is focused on producing for the power sector, while the Karaganda produces coking coal.

Thanks to its large resources and developing industry, the coal industry is drawing international investors. Firms in China and India have begun making efforts to increase their imports of Kazakh coal, according to the trade publication World Coal. Part of these efforts included the signing of a multi-stage USD1.5 billion deal, which promises to help develop a new coal processing plant in Kazakhstan. Additionally, AcerlorMittal, which is looking to diversify its coal markets for its steel factories in the Ukraine, is expected to drive growth in coming years.


Copper is a key mineral resource for Kazakhstan and proven reserves sit around 39 million tons, much of which is located in East Kazakhstan and Karaganda, and the majority of the country's output is controlled by Kazakhmys. The company, which directs copper resources down the entire value chain, has 10 mines, five processing plants, two copper-smelting facilities, and two of its own coal mines, according to the Engineering & Mining Journal. In 2015, the 45,000 employee-strong company produced 295,000mt of copper cathode, 2,946kg of gold, and 329mt of refined silver.


Gold is another important component of the mining industry in Kazakhstan, and the country's proven reserves sit at roughly 2,300mt and are estimated to be worth roughly USD48 billion. With more than 293 gold deposits identified—94 in operation, 117 in exploration—gold mining is an integral and lucrative activity in a handful of provinces. In 2016 the country produced nearly 60mt, and it hopes to increase production to 75mt by 2019, according to state officials. According to the Engineering & Mining Journal, officials hope that by 2030 they can produce 130mt annually, which would put them in the top-10 global producers.

Investing in Transparency

As the mining industry in Kazakhstan has developed over the last few years, stakeholders in the public and private sectors have recognized the need for developing the regulatory side of the industry. Government officials and industry leaders have been taking steps to increase the transparency of the industry and reduce corruption. The country's new Mining Act attempts to formalize certain best practices that have been lacking in the industry, and corporate leaders are optimistic that these changes will have a powerful positive effect on the industry. In an interview with TBY, Nicholas Bridgen, CEO of Ferro-Alloy Resources, noted that “the new transparency in the procedures will make Kazakhstan a much more popular destination for mining investment, and that change of sentiment will help.”