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 KAZAKHSTAN International Business Magazine №4, 2008
 Kazakhstan's Mining Sector: Questions Should be Answered
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Kazakhstan's Mining Sector: Questions Should be Answered
           
The professional business forum of miners Mining World Central Asia embodying four trade exhibitions and a conference was held between 16 and 19 September in Almaty. This event, dedicated to the mining and metallurgical industry as well as related industries, gave the experts an opportunity to discuss the trends in these sectors of the Kazakh and regional economies.
 
According to the spokesperson for the organising company, Iteca, more than 300 companies from 26 countries participated in the event, breaking the record from previous years. The Mining World Central Asia exposition grew by 20%, new participants came from Belorussia, India, Luxembourg, the Netherlands, and the United Arab Emirates. The KazMet exhibition was opened once again and its subject “Metallurgy and Engineering” attracted equipment manufacturers from the CIS and other countries.  
 
Unlike previous construction exhibitions, which obviously demonstrated recession in the industry, the major forum of Kazakh miners proved the stable appeal of the mining and metallurgical industry. Mining industries not only play a stabilising role in our economy but also provide the state budget with major tax income. Nevertheless they do not escape a few serious problems, which were tackled within the Innovative Mining and Metallurgical Forum, co-organised by the project-engineering company Oriental Co. Ltd. The conference gathered about 120 delegates, but surprisingly among them there were no representatives of the related ministries and state bodies. The only state authority was the Acting Director of the Project Financing Department of the National Innovation Foundation, Dmitry Dobrynin. He spoke about the mining and metallurgical projects carried out by the foundation and mentioned the lack of innovative activity from Kazakh manufacturing companies.
 
Despite the fact that no officials attended the forum, the issues tackled during it were rather serious and urgent. One of the major issues was geological prospecting. Before 2000, all the mining industries continued with the potential gained in the Soviet era. There had been no geological prospecting, no new fields explored, and insufficient investment. The quality of the resources kept falling. The situation began changing only after 2002, when several laws forced investors to take certain measures. However, during this forum several speakers noted that the government should play the leading role in this issue. The main argument was that geological prospecting was a risky industry for investment in terms of geological prospecting itself, surveying and resources management.
 
In the meantime, several subsoil users, who, not so long ago, considered the possibility of participating in the exploitation of a few fields (the government planned to hold tenders), faced the situation when, at the last moment, these sites were given to social business corporations (SBC). Judging by their comments, these companies have still not decided how to behave themselves with the new organisations. 
 
Commenting on their relations with the government, the miners and metallurgists announced that they wanted all their interests to be met. This wish was specially connected with the development of the Tax and Budget Codes, Law on Subsoil Use and Law on State Assets and customs regulations.
 
Speaking about the imposition of the tax on mining operations the experts noted different attitudes of companies and the government towards the valuations and calculating methods of the tax on natural resources production. The problem is that the on-going rally in world prices for metallurgic resources makes life difficult for those small companies that are not integrated into mining and metallurgical giants. 
 
Many factors have a destabilising impact on small players. Among them are decreasing demand, caused by the recessions in leading and developing economies, fluctuations in significant world currencies, inflation expectations, investors’ anxiety, and high levels of speculation in raw materials prices. According to the forum’s delegates, the investment cycle of each mining and metallurgical project is long and complicated; that is why it should not depend on speculations. This problem cannot be solved without the government’s support, which would include finance and related tax decisions.
 
Another serious problem is the worsening quality of the raw products. Since many fields with easily extracted resources have been already developed, it is necessary to find new ways, solutions, technologies and equipment. In particular, it is important for the gold industry where the major resources are ores with high level of hazardous and difficultly separable impurities.   
   
They also discussed an integrated use of minerals, which some time before was an important part of the mining and metallurgical process. Today nobody regulates these processes. Since current profits allow them to throw the rest to dump wastes the companies as a rule extract a limited number of components; often only one or two. Abdurasul Zharmenov, General Director of the National Centre for Integrated Processing of Mineral Row Materials also spoke about it. He noted that Kazakh scientists and developers, whose scientific and technological knowledge is not lower than that of their foreign colleagues, could provide the industry with solutions and raise the quality of the extraction. He stated that our technologies were in demand and supplied to international markets. But in Kazakhstan itself, ecological issues and the issue of integrated extraction do not get enough attention. Mr Zharmenov thinks that the government should either control or participate in this industry. Lack of an efficient state programme controlling extraction and further use of rare-earth metals, which for a long time had been thrown away with waste products and got lost, causing harm to the environment, is another serious problem. It is difficult to calculate the losses of Kazakhstan because of these omissions. The expert expects them to total several billion dollars.
 
Alexandr Danilenko, General Director of Oriental Co. also said that the country is able to solve all the technical and technological issues on a global level. He claims that almost all modernisation and construction projects of new mining and metallurgical productions in Kazakhstan from the middle ‘90s till today were fulfilled by Kazakh specialists: designers, process engineers and mining engineers. The company can solve almost any technology problem, but in terms of equipment it has to use the achievements of world manufacturers, “bringing them together as a puzzle”. Unfortunately, the majority of technical solutions come from abroad and our companies are not expected to replace foreign ones in the near future.  
 
It should be noted that even the pride of Kazakh mining and metallurgical industry, Kazatomprom, did not escape this problem. According to the Head of the company’s Science and Technology Department, Baurzhan Duisebayev, the technologies owned today by Kazatomprom actually allow it to reach the 5th-7th processing stages. A theoretic and practical scientific base gives our country the opportunity to become a world leader in nuclear fuel production. To this end, the main task is to build engineering capacities in the industry.
 
Another issue discussed was information technology for innovative changes in the mining and metallurgical industry. The spokespersons of software giants SAP and Oracle talked about the world practice of automation, recording and planning in mining industries, which allows them to automate technological, record and management processes. They spoke about methods of planning, which improved and optimised the ecological aspects of mineral extraction. One of the reports showed a rather unexpected situation in Kazakhstan. It is not a secret that as a result of negative processes in the ‘90s the population of residential estates of city-forming companies in mining and metallurgical industries decreased considerably. Later when the industry was growing there appeared to be a deficit of qualified personnel. The problem was solved by automating the processes.   
 
Taking into account global trends, Kazakhstan today pays more and more attention to the ecology and labour safety requirements.Tatyana Ostapchuk, Director of ECO Consulting, spoke about the issue at the forum. She said that some companies are already starting to decrease all kinds of waste and “controlling” accumulated past waste. “This issue demands a lot of investment, but there is no any other way, because nobody will solve this problem for us”, Miss Ostapchuk said. Unfortunately, we should acknowledge that these examples are unique today. The majority of ecology problems stay unsolved, as they have done from many years ago. In particular, Mr Zharmenov thinks that Kazakhstan is far behind developed countries in this issue - the penalty in foreign countries is up to $100 per tonne and in Kazakhstan it is only $0.07.
 
Summing up the results of the forum we can note that beside technical and technology aspects, the participants voiced several problems, which directly affect state policy in the mining and metallurgic industry. Nevertheless since state authorities did not attend the debates, this remained a voice in the desert. This attitude of the government to the industry, which it considers to be a major source of budget flows, causes perplexity. 


Table of contents
· 2016 №1  №2  №3  №4  №5
· 2015 №1  №2  №3  №4  №5  №6
· 2014 №1  №2  №3  №4  №5  №6
· 2013 №1  №2  №3  №4  №5  №6
· 2012 №1  №2  №3  №4  №5  №6
· 2011 №1  №2  №3  №4  №5  №6
· 2010 №1  №2  №3  №4  №5/6
· 2009 №1  №2  №3  №4  №5  №6
· 2008 №1  №2  №3  №4  №5/6
· 2007 №1  №2  №3  №4
· 2006 №1  №2  №3  №4
· 2005 №1  №2  №3  №4
· 2004 №1  №2  №3  №4
· 2003 №1  №2  №3  №4
· 2002 №1  №2  №3  №4
· 2001 №1/2  №3/4  №5/6
· 2000 №1  №2  №3





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