Kazakhstan, the world's largest landlocked country with vast untapped mineral resources, has a mining industry that contributes around 20% to its GDP and represents about 19% of overall exports. The country is the fourth largest copper producer and holds the world's ninth largest proven gold reserves and the largest proven zinc deposits. Despite these resources, Kazakhstan has seen little exploration in the last 30 years, with the last large-scale exploration occurring in the 1950s. The government recognizes the need for new exploration projects and substantial changes to its mining laws and investment environment to become a major mining destination rivaling countries like Canada, Australia, and Russia.
Market Structure: The mining industry in Kazakhstan is characterized by a privatized version of previously state-owned enterprises from the Soviet era. Key companies include Kazzinc (70% owned by Glencore and 30% by Samruk-Kazyna), Kazakhmys Corp., KAZ Minerals, ERG (previously ENRC), and Kazatomprom (the national uranium mining company). These players have been investing in their production processes to increase efficiency and are restructuring to improve performance. The market also includes international players like ArcelorMittal, Cameco, and Rio Tinto, as well as local companies such as Bogatyr Coal, Kazakhaltyn, and Kazphosphate.
Exploration: The lack of new exploration is the biggest problem facing Kazakhstan's mining industry. The government has allocated close to $1 billion to aid exploration before 2019 and is looking to develop mining laws similar to those found in Australia and Canada. Kazakh national companies will invest another $3.3 billion in geological exploration in areas with good potential, with Tau-Ken Samruk being responsible for much of this expenditure.
Services and Equipment Supply Chain: Kazakhstan is continuing to attract new companies seeing good future prospects in the country. Local service companies like Kazgiprotsvetmet, Iskander, Gornoe Buro, and Antal are complemented by the interest of other EPCM service companies like TOMS of Russia. Western equipment suppliers are gaining interest as companies adopt Western methods of operating.
Global Issues: Kazakhstan faces challenges such as inadequate infrastructure, environmental concerns, and a need for skilled personnel. The government has introduced the "Nurly Zhol" economic policy, envisioning massive state investment in infrastructure over the next several years. There is also a growing focus on improving mining safety and finding qualified personnel through various incentives and training programs.
Key Minerals, Companies, and Projects: Kazakhstan has vast reserves of a wide range of minerals and metals, including uranium, gold, copper, tin, coal, phosphates, chromium, and manganese. Notable projects include the Bozshakol copper mine, the Syrymbet tin deposit, and the Kazphosphate phosphate deposits. International players like Rio Tinto and Iluka Resources are actively involved in exploration activities.
Conclusion: Kazakhstan is taking positive steps toward becoming a booming mining destination by improving its legislative and regulatory framework, ensuring political stability, and developing infrastructure in remote regions. The government is working hard to present itself as an investment-friendly destination, and once an upturn in commodity prices occurs, the country is expected to greatly benefit from an improved investment climate.
