Kazakhstan Mining Report Q2 2012
Apr 05. Business Wire
BMI expect Kazakhstan’s mining industry value to reach US$41.3bn by 2016, down from their previous forecast in light of their view of an overall decline in commodity prices. Growth will be led almost entirely by the coal, iron ore, and copper sectors, which together account for the majority of the value of Kazakhstan’s mining industry, though BMI also note extremely strong growth in gold production.
The constitution of the Republic of Kazakhstan vests ownership of mineral resources in the state. The constitution states that land may be privately owned, but underground resources are state property. The controlling body for the mining industry is the Ministry of Energy and Mineral Resources. Given the strategic and economic importance of the mining sector, the government is supportive of the industry and institutes a generally positive investment climate, although it has also shown that it will intervene when necessary. For instance, in October 2010 the government suspended a proposed takeover deal between Russian gold miner Polyus Gold and Kazakhstan’s leading gold miner KazakhGold due to contractual violations and allegations of fraud. Additionally, the government raised tax rates earlier in 2010 when metal prices were high and miners were making substantial profits.
Kazakhstan’s mining sector is dominated by state-owned entities Kazakhmys and Eurasian National Resources Corporation, zinc-focused Kazzinc and gold producer KazakhGold. In the coming years, BMI expect the sector to become more competitive and increasingly fragmented, with the influx of foreign companies such as Rio Tinto encouraged by the vast potential of the country’s mining sector.