Kazakhstan is endowed with a wide range of mineral resources including coal, ferrous metals, and non-ferrous metals. Because of this mineral wealth, there is a large mining sector and more than 230 separate enterprises which produce or process coal, iron and steel, copper, lead, zinc, manganese, gold, aluminum, titanium sponge, uranium, barites among others. The mining sector is responsible for approximately 30% of export earnings, 7% of GDP, and 19% of industrial employment. The volume of industrial production by the mining industry in 2013 increased 2.6% compared to 2012, exceeding $2.3 billon which represents 1/5 of the volume of total industry in Kazakhstan.
In 2013, the production of iron ore in Kazakhstan decreased to 51.759 million tons, which is 1.6% less than in 2012. Production of copper ore was 41.732 million tons (up by 7.3%), copper and zinc - 4.910 million tons (up by 1.7%), lead and zinc - 7.256 million tons (down by 5.8 %).
In 2013, coal production in Kazakhstan decreased by 0.6%, totaling 119.9 million tons, including coal concentrate. In 2012, Kazakhstan produced 120.5 million tons of coal, a 3.5% increase over 2011. Kazakhstan is currently the world’s 10th largest producer of coal and has the 8th largest iron ore reserves with 12.5 billion tons. The nation ranks second in manganese ore reserves with an estimated 600 million tons. Kazakhstan boasts 30% of worldwide chromite ore deposits. The country is also a significant producer of beryllium, tantalum, barite, cadmium, and uranium. Kazakhstan is interested in further developing its gold mining (ranked 10th globally) and uranium mining (25% of world reserves) as commodity prices rise, and will need to attract foreign investment in order to expand current production.
The mining industry in Kazakhstan is mainly focused on exporting their products. The main importers are Russia, China and the EU.
Much of the technology and management practices of this industry date from Soviet times, which has hampered foreign sales. Exports of mining equipment to Kazakhstan have been limited by a lack of investment in this sector. In the mid-1990's, many foreign investors entered the country and started exploration and development activities, but, with few exceptions, have ceased their operations. The investors claimed that lack of transparency, poor financial incentives, unclear and arbitrary laws which favor local investors, bureaucracy, and unclear land tenure made it impossible to continue their operations. The government, in turn, claims that many investors failed to deliver on promised commitments. As a result, under the current system, few foreign companies are willing to risk investment, with or without a local partner.
Due to price increases for non-ferrous metals, gold, uranium and the growing demand for coal from 2000-2007, Kazakhstan’s mining industry rapidly developed. With the global economic crisis from 2008-2010, however, prices decreased for non-ferrous metals and coal demand dropped. Consequently, local mining companies decreased capital expenditures and production, although 2012 saw a small increase.
Still, Kazakhstan remains an attractive market for U.S. mining equipment/machinery suppliers, particularly for manufacturers of bulldozers, drilling equipment, explosives, trucks, drill rigs, trams, cranes, crushing and pulverizing machinery, dredges, hydraulic excavators, quarrying machinery and equipment, elevators, compressors, hammer mills, special trucks, etc.
Among the best sales prospects and services are diamond drilling contractors and service providers that perform geological, geochemical and geophysical surveying; equipment involved in bulk sampling such as a processing plant; small aircraft; fuel supplies; and geological supplies like sample bags. Companies that provide goods and services that address erosion, formation of sinkholes, loss of biodiversity, and contamination of groundwater and surface water by chemicals from the mining process as well as products that may minimize the harm towards the environment, will also enjoy significant demand in Kazakhstan. Explosives also present interesting opportunities in the region.
More than half of Kazakhstan’s mining, processing, and smelting enterprises currently use outdated equipment that is often in need of repair. Almost all lack environmentally friendly technologies. Kazakhstan does not have its own mining machinery industry and relies heavily on Russian imports. U.S. mining equipment firms should explore trade opportunities in used and refurbished equipment, as well as turnkey project management. Demand in Kazakhstan for mining machinery grew 9% annually through 2008, but slowed in 2009 and 2010. U.S. mining equipment and service suppliers should target major players in the mining sector such as Kazakhmys, Eurasian Natural Resources (ENRC), TNK Kazchrome, KazakhGold Group, ShalkiyaZinc, KazAtomProm, and others.
Kazakhstan’s Accelerated Industrial Innovation Development Program 2010-2014 (AIIDP) identifies the metallurgy sector as one of its priorities in the overall plan to diversify the economy and significantly increase the country’s GDP by 2015. Key projects in the sector include:
For more information contact Commercial Specialist Azhar Kadrzhanova.