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kazakhstan has a vast amount of natural resources kazakhstan

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kazakhstan has a vast amount of natural resources kazakhstan

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									Metallurgy

K

azakhstan has a vast amount of natural resources. Kazakhstan today is one of the few nations in the world abundant with substantial deposits of minerals and raw materials. Ninety- nine elements have been recognized present in the subsoil of Kazakhstan.

Kazakhstan’s mining industry comprised principally of ferrous metallurgy, nonferrous metallurgy, and coal mining, presents considerable long-term opportunities for potential investors. The development of Kazakhstan’s mineral deposits is a priority of the Kazakhstan government and represents one of the principal tasks of long-term strategy. Geographically the second largest country of the former Soviet Union, Kazakhstan contains important oil and gas reserves as well as solid mineral deposits. The country boasts one-third of the world’s chromium and manganese deposits; 50 percent of the former Soviet Union’s tungsten and lead; 40 percent of its zinc and copper; and 25 percent of its bauxite, silver and phosphorus. Over 60 elements are mined from the ores of metal minerals found in Kazakhstan. The total potential recoverable value of noble, non-ferrous and ferrous metals to be worked over the next 15-20 years is appraised at $245.7 billion, or $2.4 billion per year. Operating expenditures are evaluated at $160-180 billion, and the potential bulk profit is rated at $50-67 billion, provided that the mining sector attracts sufficient investment. Kazakhstan is the largest producer among the CIS of beryllium, tantalum, barite, uranium, cadmium, and arsenic. During the soviet period, 50 percent of Kazakhstan’s hard currency export earnings came from rare earth metals. There are still many relatively large deposits of rare metals, copper and alloying elements such as chromium, beryllium, and manganese. Kazakhstan has one of the largest reserves of chromate in the world. Large iron mines are located in the North, in Semipalatinsk oblast. There are also reserves of goethite and limonite, but these are generally considered to be of low grade. The capacity of these mines has been listed as 25 million tons/year. Large reserves of coal are generally found in the central and northern parts of the country. Kazakhstan contains large reserves of phosphorus ores. Phosphate deposits largely appear in the Zhambyl region in the South. Kazakhstan’s metal industry, the second largest industrial sector and exporter after oil and gas, has posted a third year of broad-based growth. Despite initial problems caused by the break up of the unified complex of Soviet metallurgy, especially in the most capital-intensive branch, non-ferrous metallurgy, Kazakhstan managed to attract foreign investment into the sector, which helped to revive the industry. Metallurgy is one of the most attractive areas for foreign investment. Kazakhstan possesses significant deposits of copper, zinc, lead, gold, silver, coal, aluminum, uranium, titan, and other metals. Kazakh government is aiming to create a favorable investment environment and develop appropriate infrastructure for better investment climate amelioration. According to EBRD’s and most other western specialists’ estimates, Kazakhstan today has strong chances of success, as the country has competitive advantages over its neighbors both in volume and quality of mineral resources and the level of development of science and engineering. Output of the three most important metals, copper, lead and zinc, has risen. The gold sector has also done well, increasing gold production by 56% in the year to November 2000. Mining of ferrous and Doing Business in Kazakhstan - 1 Metallurgy

non-ferrous metals rose by 33.5% year on year. The country posted growth in the output of all main metal products in 2001. Non-ferrous industry accounts for about 60% of the metal industry output. Output tends to be highly concentrated in a few large firms that are either foreign-owned or foreign-managed. As a result, these firms are benefiting from higher levels of investment and experienced management. The biggest vertically integrated companies in metallurgy are JSC Kazzink, JSC Kazakhmys, JSC Aluminum Kazakhstan, Kazchrom and JSC Ispat-Karmet.

Ferrous metallurgy and related mining
A British steel company, Ispat, owns a previously troubled Karaganda Metallurgical Plant (Ispat-Karmet), which produces most of the output of the Kazakhstan ferrous metallurgy. In 2000, Ispat-Karmet produced 5M tones of steel, out of which 3.4m tones were exported bringing to the country a revenue of US $800m, which is about 9% of the total export of the country. The company plans to invest further US $640m in the next 5 years. A national company Kazchrom is another important player in metallurgic sector. Kazchrom is a main producer of ferroalloys in the country. The company’s ferroalloys are being sold in all main world ferroalloy markets, including USA, Europe, Southeast Asian countries (Japan, South Korea, and Taiwan. Besides ferrochrome, the output of the company is comprised of metal chrome, ferrosilicon, ferrochrome silicon and silico-manganese. Aksuisky Ferroalloy Plant located in Pavlodar region, is one of the five biggest producers of ferroalloys in the world market. In 2001, the output of ferrous industry increased due to a 40% increase in the production of non-ferrous pipes as well as rolled steel, ferroalloys and ferromanganese.

Coal
Kazakhstan produces about 60 million tones of coal per year. Thirty per cent of production is exported, mainly to Russia and Ukraine. The remainder is used in domestic power generation and in the iron and steel industries. A considerable amount of Kazakhstan’s power requirements are coal based. The country has more than 400 coal deposits and total reserves of about 30 billion tones. The largest coal deposits are located near Karaganda and Ekibastuz in the central eastern part of the country. The main coal producers are Eurasian Energy Corporation, a division of Kazchrome, Ispat-Karmet, the country’s biggest steel producer, and Bogatyr Access Komir, a US-Kazakh joint venture.

Iron ore
Kazakhstan has large iron ore reserves estimated at 12.5 billion tones. Production is exported to China and Russia and also consumed domestically by the iron, steel and ferroalloy industries. Kazakhstan aims to stabilize falling production at 12 million tones per year. There are three main iron ore companies. The largest is the Sokolovo-Sarbai Mining Production Association (SSGPO), which is owned by the government (39.5 per cent) and the Kazakhstan Mineral Resources Corporation (KMRC, 25.3 per cent).

Non-ferrous metallurgy
Non-ferrous metallurgy accounts for about 12% of the total industrial output and its output is increasing in the last few years. In 2000, the production of refined silver increased by 249,468 kg, copper – by 32,833 tones, lead – by 26,922 tones, refined gold-by 1,874 kg, and aluminum - by 59,000 tones. Doing Business in Kazakhstan - 2 Metallurgy

Copper
Kazakhstan has proven reserves of over 35 million tones of copper. However, only 11 per cent of these reserves are currently being exploited. Therefore, there is a great opportunity for foreign investment in this sector. The main copper-producing region is located in Zhezkazgan, central Kazakhstan, which provides 60 per cent of total production. The other regions are Semipalatinsk and Pavlodar in the northeast. The copper sector is dominated by Kazakhmys, which owns Kazakhstan’s two main copper smelters and accounts for almost all copper production. Samsung Deutschland owns a 42.4% share of Kazakhmys and also manages the state’s 35% stake. Total investment in 2000 rose to US$82m, up by 54.7% year on year. Samsung has made large investments worth more than 100 million dollars to introduce new technologies in the company. The company produced 362,000 tones of refined copper, 96,000 tones of zinc concentrate, 410 tones of silver and 2.3 tones of gold in 1999. It aims to increase production by developing the Artyemyevsk poly-metal deposit with high zinc and copper grades in eastern Kazakhstan. Other potential developments are the Kosmurun and Akbastau fields in the east and Abyz in the Karaganda region. The company plans to modernize two of its copper smelting plants.

Gold
Strong opportunities exist for gold mining in northern Kazakhstan if production and transportation costs per ounce can be kept to a minimum. The majority of current gold and silver production comes as a by-product from base metal production, but there are also deposits that stand on their own. It has been estimated that there are 23 gold- bearing regions in Kazakhstan, and Vasilkovskoye in Northern Kazakhstan Oblast is considered to be the fourth largest gold mine in the world with 7,132,756 ounces (according to category c1) and 4,732,508 ounces (according to category c2). Another opportunity for foreign investment lies in the processing of tailings or slag following the production of both base and precious metals. Previously, soviet industrial processing was such that the loss of precious metals was sometimes higher than expected. The processing of tailings for precious metal values can be especially attractive for investors, since capital investment is much smaller than for opening an entire mining complex, thereby limiting risk. The government aims to increase gold production to over 50 tones per year (from 18 tones in 1998), which would require substantial foreign investment. At present, Kazakhstan’s largest gold producer is the Ust-Kamenogorsk lead-zinc mine and benefaction complex, which is part of Kazzink, the national zinc corporation. Kazakaltyn, another gold producer in the Akmola region, operates three mines at Zholymbet, Bestobe and Aksu, which have an estimated total of 26 tones of gold reserves. Other gold mining activities are conducted by Kazakhstan Minerals Corporation (KazMinCo) operating in Varinskoye and Agadir; Ivanhoe Mines (Canada), which has a 70 per cent interest in the Bakyrchik gold project; and Eurasia Gold Corporation (Canada) through its subsidiary Andas-Altyn.

Aluminium
Aluminium industry is dominated by a company Aluminium of Kazakhstan, which is among the top 10 leading alumina producers in the world. The company consists of the Pavlodar Aluminium enterprise with a capacity of 1.36 million tones of alumina per year, the Turgay and Krasnooktyabrsk bauxite mines, the Keregetas limestone quarry and a heat and power plant. The Pavlodar plant produced about 1.2 million tones of alumina in 2000. A US$ 60 million upgrading program envisages increasing output to 1.5 million tones per year by 2005. The company is considering constructing the country’s first aluminium smelter. The planned facility will process alumina for export to Russia. The smelter will be designed to have a production capacity of 215,000 tones of refined aluminium yearly. Doing Business in Kazakhstan - 3 Metallurgy

Zinc
Kazzink, Kazakhstan’s main zinc producer, is yet another example of successful foreign investment in the metal industry. The company Glencore (Switzerland) has invested about US$ 65 million in a new mine at Maleyevsky, which is expected to produce up to 2.2 million tones of zinc annually. Kazzink plans to invest about US$ 190 million in the next 5 years to expand production up to 150,000 tones a year. Kazzink consists of three major mining and metallurgical enterprises, the UstKamenogorsk and lead and zinc enterprises: the Leninogorsk poly-metal Plant and the Zyryanovsky lead Plant.

Tantalum, Beryllium, and Uranium
Kazakhstan has substantial reserves of uranium, tantalum and beryllium. JSC Kazatomprom was established on July 14, 1997, in order to strengthen control over nuclear material production and export. It produces and sells uranium and nuclear fuel cycle services, tantalum, beryllium, niobium and hydrofluoric acid in the world markets. The company consists of uranium mining branches and two joint-stock companies, JSC «Ulba Metallurgic Plant” (UMP) (90% of shares) and JSC «Volkovgeology” (90% of shares). JSC «Volkovgeology» has a substantial experience in geological prospecting and exploration of all types of uranium reserves. JSC «UMP» specializes in the production of materials for the nuclear industry, professional equipment, aerospace and electronic engineering devices. This plant is the main producer of low-enriched uranium pellets for reactors VVER and RBMK. Its technology enables to process all types of uranium feed and fuel elements production residual, to re-purify uranium-containing products into oxides with nuclear purity. Recently, the company started producing of fuel pellets with combustible neutrons additives in the form of gadolinium oxides and fuel production engineering devices for a new reactor II-500. Uranium reserves in the republic are estimated at 900 thousand tons, and 600 thousand tons of these reserves can be mined by in-situ leaching method (ISL). In the 1980s, as a part of the Soviet Union, Kazakhstan was producing 4.5-5.0 thousand tons of natural uranium annually. There are several unique deposits in Kazakhstan where thousand of tons of uranium are concentrated in ISL amenable ores, for instance, Inkai, Mynkuduk, Kharasan deposits and others. Starting from the middle 1990s all uranium mines in Kazakhstan have been using only ISL method, which is highly economical, efficient and more environmentally friendly than other conventional methods. There are about 17% of reasonably explored world uranium reserves in the Republic of Kazakhstan and about 60% of them could be mined by ISL method. Currently, there are five operational deposits – Uvanas, Eastern Mynkuduk, Kanzhugan, Nothern and Southern Karamurun – with annual combined production of about 2 thousand tons of uranium. Remaining in-situ reserves in these deposits are of about 80 thousand tons. Practically all the deposits in Kazakhstan are grouped into six uranium ore provinces, namely, Northern Kazakhstan (Kokchetav), Kendyktas-Chuili-Betpakdala, Ili, Chu-Sarysu, Syrdarya, Precaspian (Mangyshlak), which makes the country one of the biggest uranium bases in the world. JSC «Kazatomprom» cooperates with leading companies all over the world, principally on a longterm contractual basis. Two joint stock companies with foreign participation have been created for uranium ISL mining: JSC «Inkai» founded by JSC «Kazatomprom» and «Cameco» Corporation, and JSC «KATKO» founded by JSC «Kazatomprom» and «Cogema» Corporation. The Inkai and Moyunkum deposits contain 200 thousand tons of confirmed uranium reserves. Uranium from these deposits belongs to the low cost category – less than US$34 per kg. Tantalum and its alloys are widely used in chemistry, metallurgy, electronics, medicine, nuclear, and aerospace industries. UMP sells tantalum metal ingots, tantalum mill products and tantalum powders. Beryllium has very high corrosion resistance, light weight, form stability, and high melting point. Due to its unique physical and chemical features, beryllium is used in many industries such as nuclear, aerospace, defense, electrical engineering, electronics, and other industries. JSC Kazatomprom is one of the two companies in the world having a complete cycle of beryllium production – from ore concentrate processing to the fabrication of beryllium alloys. Doing Business in Kazakhstan - 4 Metallurgy


								
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