Mining and metallurgy has always been and will be a key sector of our economy
The First vice-minister of industry and new technologies of the RK Mr. Albert Rau answers the questions from the Kazakhstan magazine.
What is the role of the Mining and Metallurgy Sector in the FIID Program?
As you know the main economic program initiated by the President of Kazakhstan is the Program of the Forced Industrial and Innovative Development. Its realization is a key task for the government for the next five years. At that the Mining and Metallurgy Sector has always been and will be a key area of our country’s economy. Moreover, the Head of the State has defined the development of this sector as a preferred direction of the new industrial program.
Indeed, it is hard to overestimate the role of the MMS: the industry is accounted for over 7 % of GDP, around 17 % of the total amount of industrial production and around 20 % of the total Kazakhstani export. Only in the last year the MMS companies exported the products for the amount of over $8 billion which is by 39 % higher than the index of 2009.
We should remember that many of the mining and smelting companies are the city-forming ones. And therefore, the development of the MMS is the development of the cities and the work places for more than 200 thousand people.
Therefore, the mining and metallurgy sector is a strategic branch of our country’s economy. At that its main role is in providing the raw materials for other high-technology and knowledge–intensive sectors aimed for producing the end products including the machine-building, construction industry, aviation, space and defense industry.
In terms of the number of the MMS projects included in the FIID program then only last year within the industrial development map this industry started 23 new productions with the total cost of 305 billion tenge. This year we are planning to start 16 more projects with evaluated cost of 61 billion tenge which shall help create 2,679 work places.
Could you give us some more details about the initiative of creating a state geological exploration company?
On April 17th at the enlarged session in the government the President noted that our country still uses the reserves that were explored at soviet times. In connection with this the Head of the State indicated the necessity of increasing the pace of developing the raw-materials sector in the part of expanding the raw-materials base and replenish the reserves used.In particular, he issued an order to establish a National geological exploration company which shall solve practical tasks in the geologic area – carrying out the complex geologic exploration of subsurface resources for the purpose of discovering the new mineral deposits.Another direction of its activity shall be the scientific activity in the area of exploratory development of the subsurface resources which shall allow for developing new technologic approaches to the conduction of the mineral resources exploration and development.
In the organization of a new national company there shall be used an experience of the JSC NC KazMunaiGas and JSC NAC Kazatomprom that are actively and quite successfully carry out the geological exploration for ensuring a sufficient rehabilitation of mineral resources of its industries.
In 2011 the financing of the geological exploration was allocated with over 10 million tenge which is an undoubted progress compare to the previous years. In addition to that by our assessment in order to ensure the stable development of the geological exploration the volume of the annual state financing of carrying out the geological exploration should be increased up to 40 billion tenge.
What new large projects in the MMS are planned to be realized together with the foreign investors?
Presently in the East-Kazakhstan oblast a Canadian company Altynalmas Gold Ltd. has started carrying out the project Kyzyl Gold (LLP Bakyrchikskoye mining company). Within this project it is planned to produce 11.5 tons of gold in 2014 and in 2015 it is planned to increase the production of this precious metal up to 15 tons. Moreover, over the period from 2018 to 2020 considering the geological exploration the Bakyrchinskoye mining company intends to increase the gold production volume up to 20 tons. At the first stage here shall be created 600 permanent work places (400 during construction period). The LLP BGP is planning to produce the bar gold at its own processing plant which should be opened in 2015.
What criteria are considered when including the new mining and smelting projects in the industrial development Map?
Both domestic and overseas companies can participate in it. The most important is so that their projects would be realized at the Kazakhstan territory and conformed to the priorities of the FIID program, to the approved industry programs and to the territory development programs.
One of the main criteria to be included in the industrial development Map is the labor capacity. Thus, this index must be doubled compare to 2008 for the existing productions that realize the modernization projects. When it comes to the new productions then the adequate labor capacity level for the projects of the large and medium businesses shall be calculated by the Statistics Agency taking into the account the world equivalents, and for the SMB by the new method of the Kazakhstan Industry Development Institute which considers the monthly average salary, inflation ratio and regular profit. At that there must considered an added value per each employee.
A special attention is paid to the improvement of power saving. Thus, the existing companies which realize the projects within the industrial development Map must achieve the 10% power consumption decrease compare to 2008. Thereat the new large and medium productions must ensure the power saving indexes at its world equivalents level.
Another key parameter that is considered in the first place when reviewing the projects of the existing companies is the product line diversification development. The companies must provide at least the transfer to a new process stage in issuing the new product.
One of the actual issues for the domestic companies is the necessity to modernize the production process. What state stimulation mechanisms of the technologies transfer in the MMS are presently envisaged?
Indeed, a significant technological lag today is the common problem for all industry branches in Kazakhstan. The country has almost no engineering companies capable of providing the world level services from the analytical studies’ level, exploratory work, feasibility studies and detailed design, and to the technical guidance and acceptance. As a result almost all major projects in Kazakhstan are serviced by overseas companies.
If we are to talk about the MMS itself then there shall be created a Metallurgy center. The goal of the project is the development of domestic science and creation of an experimental pilot technical base. Various large-capacity researches and experiments on thorough elaboration of technologies, production of pilot batches of the new types of machinery, materials and products developed by the scientific and engineering, production and research organizations of Kazakhstan and other countries shall be carried out here.
The new center the users of which shall be the mining and metallurgy sector companies, national companies and other organizations operating in the subsurface resources field shall be able to provide the engineering services by the international standards including:
· study of extraction and metallurgy issues of each existing company providing the recommendations on their elimination;
· provision of the advanced extraction equipment based on the technology transfer for the rational processing of the mineral raw materials;
· conduction of the pilot tests for the feasibility study of developing the new ore deposits;
· development and improvement of the technological processes for the existing companies;
· development of degradation and extraction methods, as well as the equipment for the concentrating mills;
· preparation of information about the technological process for designing the MMS companies and feasibility studies for the bank expert examination.
What measures are taken in the question of the state support to the relevant productions development and engagement of SMB companies to the mining and metallurgy sector?
The new industrial policy also changes the emphasis in this industry. We must have all the processing stages developing. The main emphasis is on the production of the base metals and development of the SMB belt (low-capacity production) issuing the high-processing stage products which shall be located around the large companies producing the basic metals.
The main principles on which the industry must be based over the next five year period shall be: 1) increase of the gross added value of the products; 2) attraction of investments and new technologies; 3) increase of the labor capacity, decrease of energy consumption and improvement of the energy efficiency; 4) compliance with the environmental regulations during exploration, production, processing and obtaining of the finished product.
The Government has approved an Industrial program of the MMS development for the 2010-2014 for solving the set tasks, certain investment projects have been defined, the “niche” perspective projects for attracting the investments have been identified.
When it comes to the state support of the private business projects then a “Productivity-2020” program has been approved by the RK Government’s resolution No. 254 as of March 14th 2011. The program stipulates the whole line of the state support tools. This includes the innovative grants, reimbursement of the part of expenses for attracting the highly qualified foreign technicians and engineers, project and engineering organizations, purchase of licenses, technical documentation, franchise and technologies, as well as a long-term lease of the industrial equipment. Only this year the country allocated $137 million (19.9 billion tenge) for the realization of this program.
I would like to point out that the “Productivity-2020” program is supplemental and final within a whole complex of existing programs including the “Road map of business” and the programs for supporting the exporting companies, attraction of investors and post-crisis recovery of the companies.
What measures are taken for the proper training of the personnel for the MMS?
Providing the MMS with a qualified human resources within the industrial and innovative development is one of the main tasks specified in the industrial program for 2010-2014.
Presently the personnel training for the MMS is arranged in 5 higher education institutions on the following specialties: “Metallurgy”, “Mining”, “Material sciences and new materials technology”, “Geology and mineral deposits development”. As of today, the total number of students is 5,747, including 3,816 on the educational grants. Only in the academic year of 2010 the industry obtained 1,455 young specialists with a higher education.
If we are to talk about the technical and professional education system (TaPE), then here 8 institutions prepare the miners and metallurgists in 6 specialties and 11 qualifications. Thus, 2,117 people study for the metallurgic specialties (886 of them within the state-guaranteed order), and 9,475 people for the mining specialties (3,266, accordingly).
According to the regional educational departments’ data the state-guaranteed order for the education of human resources is created at the cost of local budget and approved based on the regional demand for the middle specialists considering the applications from the companies.
Today the work of defining the MMS’s demand for the trade specialties with the development of the qualitative requirements to their training continues within the FIID program. According to the information from the Ministry of Labor and Social Security the realization of the mining and metallurgy sector projects included in this program requires additional human resources in amount of 12.4 thousand people. This demand shall be completely satisfied by the personnel training in other educational institutions of the TaPE which plan to provide training for 41.4 thousand people in 2010–2014.