Kazakh Chemical Industry Develops at a Stable Pace

July 15. MFA

Kazakh Chemical Industry Develops at a Stable PaceKazakhstan’s chemical industry has several operating companies which successfully attract investments and increase the output for both the internal market and exports.

According to an article by Expert Kazakhstan magazine, today, there are more than 200 enterprises in the chemical industry. However, together they employ less than 15,000 people, and the majority of the companies are medium sized businesses.

Last year, under the State Programme for Accelerated Industrial and Innovative Development (PAIID) a new development programme of the chemical industry for 2010-2014 was adopted. In accordance with the plan, the chemists’ gross production will increase twofold through the increase in production of phosphorous and nitrogen fertilisers, as well as the setting up of the production of potash plant nutrients. The industry’s output should be extended with six new kinds of products, including caustic soda, chlorine, hydrochloric acid, sodium hypochlorite, ammonites, as well as biologic products and humates. Currently, most of these products are imported into Kazakhstan.

The main task of the five-year programme is to reduce this deficit, as well as start exporting, particularly sodium hypochlorite and hydrochloric acid. In addition, a similar programme exists in respect to the pharmaceutical industry, where in four years it is planned to increase the share of Kazakhstan’s products on the market up to 50 percent.

In order to reflect on the industry’s current situation, Expert Kazakhstan interviewed several chemical companies of the country, including the three largest ones, “Kazphosphate” which operates mainly in agricultural fertilisers sphere and is located in Taraz (south Kazakhstan). The second one is “Caustic”, located in Pavlodar (north-east of the country) which operates within the segment of inorganic chemistry, and “Khimpharm” which specialises in the pharmaceuticals and is located in southern city of Shymkent.

According to the data, industry leaders have been steadily increasing the output for the past several years. According to Director of Khimpharm Rustam Baigarin, in monetary terms, the production has been growing on average 30 percent a year for the past five years.

“Today, in monetary terms Khimpharm’s share on the market of pharmaceuticals makes more than five percent, and more than 20 percent in terms of the wholesale of medical drugs,” Baigarin commented.

According to Mukash Iskendirov, Chief Executive of Kazphosphate, the company also achieved a substantial increase in production, rising from KZT 18 billion in 2006 to KZT 31 billion in 2010, which accounts for a 77 percent increase.

The reason for such growth is not only an increase in physical volumes of production, but also constant expansion of product line. For instance, Khimpharm introduces 15-20 new drugs annually, where 65 new products have been registered since 2007, and in the next five years the company plans to register another 185.

“Geography of our exports is extensive – almost all countries of the European Union and the Commonwealth of Independent States, China, Turkey, and Iran. At the moment we are negotiating supplies into new markets, such as Japan, India, the United States,” CEO of Kazphosphate Iskendirov explained.

“The company (Khimpharm) actively exports products to countries such as Uzbekistan, Kyrgyzstan, Tajikistan, Azerbaijan, Georgia, Russia, Ukraine, and Armenia. Until last year, the company also exported medicinal products to England and Holland,” director of Khimpharm Baigarin said.

According to the article, the most severe competition in domestic and international markets can be observed in the sphere of pharmaceuticals, where the major problem of domestic chemists is the lack of necessary components. For instance, Kazphosphate purchases more than 60 percent of coke from China, and the situation is similar to plant nutrients such as ammonia, and some other materials.

Each of the three companies stressed the shortage of skilled personnel, including engineers, and managers. On the other hand, there is no lack of technicians, operators, and other production staff. In this regards, Kazphosphate’s Iskendirov highlighted, attention is being paid to this matter and since 2008, a corporate training center operates in the city of Taraz, as well as in provision of higher education in particular specialties, in which the company is interested, Kazphosphate covers the costs of studying.

Similar educational complex is also planned to be established in the city of Pavlodar. “Today, the Caustic is investing considerable amounts of money in training, including in overseas training centres of similar enterprises,” Chairman of the Board of JSC Caustic Yerlan Orymbekov said.

“Today, there is a system of complex measures developed to support domestic pharmaceutical producers, which includes the provision of non-competitive environment in holding of public tenders, adoption of seven-year contracts on provision of manufactured products under state programmes,” says Baigarin. “This represents the compensation of costs associated with promoting of products in foreign markets, such as the costs of product registration, opening of foreign missions, etc, as well as the possibilities which derive from the establishment of the Customs Union, which includes common registration process, tenfold increase of the market, etc.,” Director of Khimpharm Rustam Baigarin explained in regards to the state’s policy towards the chemical industry.

Overall, according to the article and heads of the above enterprises, the chemical industry remains high in terms of investment attractiveness, and taking into account the evaluation of the inorganic chemistry market, the industrial production in the country will continue increasing at the same steady pace at which existing manufacturers are developing.