MINING SECTOR:
ONE TO WATCH

The Republic of Kazakhstan is one of the world's best-endowed states, possessing world-class deposits of minerals and raw materials. Vast quantities of base and precious metals have been discovered, with countless others waiting for discovery and development. This sector provides 30% of Kazakhstan's export earnings, 16% of GDP, and 19% of industrial employment.

The following chart illustrates the immensity of Kazakhstan's mineral reserves compared to other major mineral suppliers:

Kazakhstan's Mineral Reserves
(countries in parentheses represent countries with similar reserves of the specified metal)
Compiled from Mining Journal Annual Review

(click on the chart to view the larger version)
Source: World Bank/Ministry of Natural Resources and Ecology

In addition to the above reserves, Kazakhstan among CIS states is also the largest producer of beryllium, tantalum, barite, uranium, cadmium, and arsenic. Coal and bauxite are also mined in substantial quantities.

The Government of Kazakhstan began to privatize state mining companies in 1994. By July 1998, virtually the entire sector had been privatized. The government is working to improve the sectoral outlook by stiffening legal codes. The mechanism for granting exploration licenses has been simplified, but implementation work remains. The procedure for obtaining environmental permits is being streamlined. Thus far, Access Industries has demonstrated success operating the privatized Bogatyr and Severny coal mines, producing over 40 million tons per year, and more privatization is expected to bring other companies to the mining sector in the years ahead.

A number of North American mining businesses have made substantial investments in Kazakhstan in uranium, beryllium, coal, and gold. RWE NUKEM, for example, handles mined uranium and markets it to other countries under IAEA safeguards and in accordance with U.S. anti-proliferation efforts. Opportunities of particular interest to American business may lie in the gold mining and the post-processing of base and precious metals. Most Kazakhstani mining equipment needs replacement or repair, and environmental and technological upgrades. Opportunities thus abound for the years ahead. Further, as legal codes become more conducive to foreign investment, all of the mining majors are likely to become more heavily invested in Kazakhstan in the next ten years, and market entry in later years could become a much more expensive proposition. As conditions improve in this sector, the mining industry in Kazakhstan will be one to watch closely.