How Kazakhmys billionaire Vladimir Kim rose to the top

October 07. Central Asia newswire

By Hal Foster

How Kazakhmys billionaire Vladimir Kim rose to the topVladimir Kim, who burst into the headlines this week with a billion-dollar sale of Kazakhmys stock, did not have a lucrative company handed to him through connections like a number of oligarchs in the former Soviet Union.

Reading between the lines of his biography suggests that his story is more about talent, hard work and being in the right place at the right time. He did make top political connections later, but they came after he achieved business success.

The 49-year-old became a household name this week when he sold $1.3 billion worth of the stock of the copper giant to Kazakhstan’s sovereign wealth fund.

In the mid-to-late 1990s, Kim helped revive the forerunner of Kazakhmys, which had become a basket case when the U.S.S.R. collapsed in 1991 and 1992.

When the company stabilized, then took off, the Kazakhstan-born ethnic Korean was rewarded with stock that became worth billions of dollars.

Kim, who turns 50 on October 29, was born in Alma-Ata, Kazakhstan’s largest city, in 1960. The city has since been renamed Almaty.

Josef Stalin forced Kim’s parents to relocate from the Far East to the Kazakh Socialist Republic as part of an effort to isolate ethnic groups the Soviet leader thought might cause trouble if left in their homelands. Stalin, who died in 1953, ordered most of the relocations during the 1930s and 1940s.

Kim’s success story began when he became a Communist Party functionary after graduating from the Alma-Ata Architectural Institute in 1982.

In those days a position with the party was the main road to success.

Kim was an instructor of Marxist-Leninist doctrine at the Communist Party’s Alma-Ata Regional Committee headquarters, then became its deputy chairman.

A few months after Kazakhstan declared its independence from the Soviet Union on December 16, 1991, Samsung appointed him head of its new Kazakhstan subsidiary. It was a great job for a 32-year-old at a time when the country was in chaos transitioning from a planned to a free-market economy.

Kim’s big break came in 1995 when the government awarded Samsung a five-year contract to revive the ZhezkazganTsvetMet mining and metals operation – and Samsung asked Kim to head the effort.

ZhezkazganTsvetMet smelted 200,000 tons of copper a year during Soviet times. Its production ground to a halt during the early 1990s, and it was $180 million in debt, a fortune in those days.

The terms of the turnaround contract that Samsung obtained included the Korean conglomerate providing the government with a $200 million loan to eliminate the debt.

Under Kim’s direction, the company – which was renamed Kazakhmys in 1997 – began bouncing back. In just three years it had repaid its debt to Samsung.

In 1999, Kazakhmys gained political clout when another Korean-Kazakh, Vladimir Ni, became a board member. Ni was a political advisor to, and confidant of, President Nursultan Nazarbayev for 13 years before his death this summer.

The government was so happy with Kim’s Kazakhmys turnaround effort that after Samsung’s five-year management contract was up, it transferred a lot of the state-owned stock to a trust in his name. That same year, 2000, Kim was named chairman of the company’s board.

In a throwback to his early days in politics, Kim in 2002 became a member of the Political Council of Nazarbayev’s Otan Party, now called the Nur Otan Party.

In 2004, Nazarbayev’s brother, Bolat, joined the Kazakhmys board.

When the company listed its shares on the London Stock Exchange in 2005, investors gobbled them up. Kim became a paper billionaire. This week he became a cash-in-the-bank billionaire.

Before his big share sale, he owned 39 percent of Kazakhmys, Kazakhstan’s largest copper company and one of the 10 largest in the world. In addition to copper, the company produces gold, zinc, silver and petroleum. It’s also one of Kazakhstan’s largest power generators.

Kazakhstan’s sovereign wealth fund, Samruk-Kazyna, bought the 11 percent share that Kim sold this week, increasing its stake in Kazakhmys from 15 percent to 26 percent. Kim’s share fell to about 28 percent.

Samruk-Kazyya has been accumulating shares of some of Kazakhstan’s largest petroleum and mining operations in recent years. It has said that they are such crown jewels of the economy that it’s in the national interest for the government to ride herd on them.

Kazakhmys produced 320,000 tons of copper last year, and expects to generate considerably more than that when new mines and processing facilities come on line in 2014.

In the past two years the sovereign wealth fund also has acquired half of Kazakhmys’ Ekibastuz-1 power plant, the largest coal-fired generating facility in Kazakhstan.

Shortly after the stock sale, Kim said he will continue as Kazakhmys’ chairman.

“I remain fully committed to Kazakhmys and its future,” he said in a statement. “My role within the group is unchanged, and I look forward to continue assisting the company in delivering its long-term goals.”

Forbes lists Kim as the world’s 247th richest person, with a fortune of $3.7 billion. The magazine says he’s the wealthiest person in the former Soviet Union outside of Russia.