The National Program for the Reproduction of the Mineral Resources
Kazakhstan is among the top ten leading countries in the world in terms of confirmed reserves of most types of minerals.
The mining industry is one of the main sectors of Kazakhstan’s economy. Compared to other Central Asian countries, besides having large mineral resources Kazakhstan’s mining industry is primarily privately owned and has a diversified service sector and developed infrastructure. This makes Kazakhstan attractive to both local and international investors.
Kazakhstan is among the top ten leading countries in the world in terms of confirmed reserves of most types of minerals.
According to the Government of the Republic of Kazakhstan, the extractive sector contributes about 30% of the GDP. However, with the current intensive production, the country is close to depleting its mineral resources and needs to boost exploration programmes. It must be recognised that geological exploration in Kazakhstan is not developed. For 30 years, not a single large mine has been discovered in the country. There are several objective reasons why this happened. Kazakhstan has the lowest rate of investment compared to leading mining jurisdictions. For 1 km² Kazakhstan invests only $ 11 in exploration. In comparison, Australia’s investment in exploration per 1 km² is $ 167 and in Canada $ 203 per. Such investments bring visible results that are reflected in the standard of living of these countries. As global experience shows, companies invest in exploration in those countries where the state at its own expense has already carried out or is conducting early stages of exploration offering investors access to a database of promising areas with indicated resources. To date, a total of more than 8 thousand deposits have been registered on the state balance of minerals of the country. Of these, hydrocarbons – 317, solid minerals – 910, common minerals – more than 3 thousand and about 4 thousand groundwater deposits.
Among the problems having a negative impact on the state and prospects of development of the geological industry are the following
In this regard, the main objective of the geological sector development concept is to create conditions for attracting investment in mineral exploration.
The concept of development of the geological industry of the Republic of Kazakhstan until 2027 involves the solution of several key tasks.
Increasing the geological study of territories and identifying promising areas, primarily for critical minerals (non-ferrous, precious and rare metals), including replenishing the resource base of single-industry towns with the predominant development of mining and metallurgical enterprises.
Development of the infrastructure of the geological industry, primarily in hard-to-reach steppe and mountainous regions of Kazakhstan
Creation of conditions for increasing the competitiveness of domestic geological exploration enterprises and geological services.
Improving the efficiency of geological exploration through the introduction of modern technologies for digitalization, monitoring, and automation of production processes. Advanced training of employees of the geological industry.
The “Development of the geological industry” national program is included in the National Project “Sustainable Economic Growth Aimed at Improving the Welfare of Kazakhstanis”. Kazakhstan leads as the top investment country in Central Asia attracting 46% of foreign investment. The main investor countries are the Netherlands, the United States, Switzerland, the Russian Federation, China, Belgium, the United Kingdom, South Korea, Turkey and France. The growth of foreign investment in the mining industry in 2022 reached 18.3%. In 2023-25, Kazakhstan plans to intensify state participation in identifying promising areas and facilities for subsequent transfer to subsoil use.
According to existing plans, by 2026 the study of the territory of Kazakhstan will increase by 680 thousand square kilometres and will cover 2.2 million square km. In Kazakhstan, there are significant prospects for the discovery of new deposits of tungsten, molybdenum, aluminium, and tin, as well as rare metals. In addition, considering current trends in the world market and the increased demand for rare and rare earth metals, as well as lithium, special attention is paid to identifying promising areas for these types of raw materials.
In June, the National Geological Service was established based on the Republican Center for Geological Information “Kazgeoinform” and the National Geological Exploration Company “Kazgeology”. The service will provide comprehensive support to investors through open access to geological information, the National Mineral Resources Data Bank. National Geological Service will accumulate, systemise and analyse geological information jointly with the scientific institutions of Kazakhstan. The National Geological Survey plans to build two core storage facilities. As a result, the level of provision of public infrastructure in the geological sectors will reach 100%.
Kazakhstan has a huge potential for expanding the production and export of critical raw materials for the development of the so-called ``green economy`` and the digital transformation of the global economies.
In the near future, Kazakhstan plans to intensify the production and export of rare, rare earth and battery metals. Another important resource for export will be “green” hydrogen. The main partner in the development of projects will be the European Union within the framework “resources in exchange for investment and technology” partnership. The share of the European Union accounts for about 30% of Kazakhstan’s foreign trade and the share of foreign direct investment exceeds 60%. Of the 30 types of critical raw materials needed for the EU countries, 16 are produced and processed in Kazakhstan.
On November 7, 2022, Kazakhstan and the European Union agreed on a strategic partnership in the field of the sustainable value chain of raw materials, batteries and green hydrogen. The partnership will focus on the procurement of critical raw materials, such as rare and rare earth metals, as well as other industrial products important for the “green” and digital transformation of the economy.
For these purposes, the European Union has created European Raw Materials and Battery Alliances, which include industrial enterprises along the entire value chain, investors, government, and research and technology organizations. Cooperation with alliances in the future will allow Kazakhstani enterprises to enter the global value chains.
The strategic partnership also reveals the potential for the development of cooperation between the parties in the areas of investment, the geological study of subsoil, the development of scientific research and the modernisation of the mining sector.
Increasing information transparency and accountability in the field of subsoil use is the most important incentive for the growth of public confidence and investment.
Kazakhstan is among the top ten leading countries in the world in terms of confirmed reserves of most types of minerals. At the same time, due to intensive mining, the reserves are fast depleting and the quality of ore is becoming poor making it uneconomical to mine.
To address these challenges Kazakhstan needs to invest in identifying new promising areas and boost exploration by the private sector.
To develop geological science and provide raw materials for the manufacturing industry in Kazakhstan, the Ministry of Ecology, Geology and Natural Resources, together with the Ministries of Digital Development, Energy, and Industry, are developing the national information system KAZNEDRA. Its goals are to reduce administrative barriers, simplify investors’ access to geological information, as well as update the digital Program for managing the state subsoil fund, which allows obtaining the right to exploration and production.
The Ministry of Industry and Infrastructure Development of the Republic of Kazakhstan, together with the Ministry of Digital Development, Innovation and Aerospace Industry of the Republic of Kazakhstan, is working on the digitalization of the subsoil use sphere.
It is expected that these measures will improve the investment attractiveness of the country by significantly reducing the list of documents, the timing of their submission, and administrative barriers, as well as making the procedure for issuing a license transparent.
In agreement with the Extractive Industries Transparency Initiative, the Government of the Republic of Kazakhstan discloses information only on contracts and licenses concluded, issued or changed from January 1, 2021. From 2023, a full audit of subsoil use contracts and an assessment of their contribution to economic and social development are being proposed.
As a result of the audit, the state plans to return to state ownership the licenses issued with violations. They will then be offered to bona fide investors with a proven track record.
In 2024, a new Tax Code will be launched in Kazakhstan. According to the government, it will relieve the business from excessive administrative pressure.
Approaches to public procurement and the model of public-private partnership will be completely revised, and legislation on subsoil use will be improved. Kazakhstan is planning to introduce differentiated rates for various sectors of the economy, a luxury tax, as well as exemption from investments in R&D sectors.
Broad public audiences are involved in the discussion of the new Code. There are numerous disputes and ongoing discussions. Tax stability for investors is one of the key factors, however, the Tax Code itself is one of the most important tools for managing the country’s economy.
In the new Tax Code of the Republic of Kazakhstan, a significant role is dedicated to the taxation of mining companies – the largest contributors to the national budget.
Another important factor is the trend towards decarbonisation and the transition from hydrocarbon-containing to alternative energy sources.
The mining and metallurgical industries are the largest atmospheric pollutants. In 2021, Kazakhstan has committed to achieving carbon neutrality by 2060. The mining and metallurgical industry are one of the top three air pollutants. Reducing carbon emissions by 19% by 2030 and being carbon neutral by 2060 will require a clear roadmap and coordination across all sectors. To fulfil carbon neutrality commitments, companies must significantly increase investment in the development of “green” technologies. Many are already implementing programs to cut back carbon emissions. However, the transition to carbon neutrality will require unprecedented investments in the development of new production methods and renewable energy technologies. Clearly defined ecological fiscal regulation and green taxonomy will be playing a critical part in supporting sustainable and responsible mining.
The mining industry is undergoing a profound transformation associated with changes in the energy supply.
Mining is one of the most energy-intensive industries, consuming about 6% of the world’s energy resources. Changes in the energy supply and the decarbonisation of production are key factors in the sustainable development of mining companies. Miners are increasingly adopting hybrid energy solutions. Mining companies are in a unique position – on the one hand, they need to find solutions for a “green” energy supply, and on the other hand, they are a key component in the supply chain of new low-carbon technologies. The mining industry needs to find smart ways to apply green energy solutions to its operations that can maintain the reliability of the energy supply and become an effective investment that satisfies shareholders and investors. The focus now is on cleaner and cheaper sources of energy which should not be ignored.
Social partnership systems are one of the cornerstones of the sustainable development of the mining industry.
In addition to investment in production assets, the participation of mining companies in the socio-economic programs is essential for creating a favourable environment both at the regional and national levels. Recent unrests are direct proof. Social instability threatens enterprises with disruption of production, material losses, market devaluation, and the loss of investor confidence. The current policy of the government of Kazakhstan is aimed at creating a more equitable socio-economic model. Investment climate and the future socioeconomic development of the country depend on determining the balance between the interests of the state, business, and society.
In Kazakhstan, a course has been taken to modernize the geological industry using innovative exploration methods.
With the current intensive production, Kazakhstan’s resource base is rapidly depleting. Until recently, expenditures for exploring new deposits and increasing mineral reserves in the country were among the lowest in the world.
With the reform of the geological industry, which began in the Republic in 2018, the situation in the geological industry began to change dramatically. Besides mining companies, the state is involved in solving the tasks of increasing mineral resources. The National Geological Service created in June 2022 will take on the risks of carrying out early-stage exploration and identification of promising areas with inferred resources.
Given the vast areas of Kazakhstan, the effectiveness of geological exploration largely depends on the use of advanced technologies, comprehensive analysis and the high competence of specialists. In this regard, the Republic has set a course for the modernization of the geological industry using innovative methods of exploration. A decision was made for the development of technologies that allow in real-time to collect, process and analyze data from geological studies, as well as the transition to automation of routine manual labor of specialists while improving the quality of the work performed.
The primary task of modernisation of geological studies in Kazakhstan is the creation and automation of workflows from the digital core, geological research data, seismic exploration, and regional and basin modelling to digital geological models, as well as their automated updating based on constantly incoming new data. The use of Big Data and Data Mining technologies (obtaining new knowledge based on data – machine learning, artificial intelligence, etc.) will increase the accuracy of planning and the speed of decision-making. Modernsation of the industry will also help to improve the quality of deposits valuation and determine the best methods for their development and operation.
Together, these changes are expected to increase the attractiveness of Kazakhstan and create the necessary conditions for intensifying investments in the development of the mineral wealth of the Republic.
The demand for metals in the global economy is constantly growing. This mega-cycle is likely to last several decades.
. This mega-cycle is likely to last several decades and is driven by the rapid development of urban infrastructure, the decarbonization of industrial production and the transition to alternative metal-intensive modes of transportation and energy supply. To meet the demand, many mining companies are looking for large new deposits with high mineral content. The likelihood of discovering such deposits is higher in mining jurisdictions with underdeveloped resources. The last major geological discoveries in Kazakhstan were made during the Soviet period over 40 – 60 years ago. Active geological exploration in the country began relatively recently – about 10-12 years ago. During this period, Kazakhstan has been consistently improving investment and business conditions in the mining sector. In December 2017 it has adopted the new Code “On Subsoil and Subsoil Use”. Kazakhstan became the first country in the former Soviet Union block to integrate into its national subsoil use management system the best internationally recognised practices of state regulation, geological information and environmental safety management. At the same time, the question remains open whether Kazakhstan will be able to benefit from the global demand growth for metals and minerals. According to the official forecasts, the reserves of non-ferrous and precious metals in Kazakhstan are limited and can be depleted in 12 –15 years. To boost exploration the Government is planning to increase four times the funding of the National Project for the Development of the Exploration Industry, approved in 2021. The Project’s objectives are to discover by 2030 around 40 – 50 large Gold, Copper, Polymetal, Uranium, Rare earth and hydrocarbon deposits which will then be offered for development by national and international companies and investors. In January this year, the government decided to raise taxes for mining & metals companies and in return, promised greater incentives for the exploration and development of new deposits. The industry insists that tax incentives are the most powerful motivation instrument to boost badly needed exploration and renew Kazakhstan’s mineral reserves. Major discoveries are expected in remote areas. This will require substantial state support to share the costs of infrastructure development.
Access to finance for the modernisation of existing production facilities and the development of new projects is a challenge for the mining industry.
Achieving carbon neutrality in industrial production requires significant investment commitments from mining companies, and financial and government institutions. Global climate initiatives stimulate the creation of new financial instruments and the development of taxonomy practices for green and adaptation projects. To enhance ESG financing of industrial transformation a widespread discussion is taking place on many levels. Credit institutions and stock markets are developing new criteria. Raising finance for green and adaptation projects helps companies to improve their ratings and increase market value. Companies are mastering responsible financing tools that allow them to raise funds for reducing climate change footprint and implement green projects e.g., waste management, energy, construction, transport, water supply, biodiversity, and environmental preservation.
Technological modernisation of mining companies plays a critical role in further improving their efficiency.
New advanced technologies are needed across the whole operational chain from mineral exploration and extraction to reducing atmospheric emissions and environmental footprint.
One of the most effective areas for reducing costs and increasing the efficiency of mining is the transition to Industry 4.0 technologies, which combine the capabilities of the industrial Internet with human and artificial intelligence. According to official estimates, virtually all mining operations in Kazakhstan have a 10-15 % potential to improve efficiency and reduce the cost of operations. At small and medium-sized enterprises, this potential is 50% or greater. Many mining companies have developed digital transformation strategies and are exploring the possibilities of introducing 4.0 technologies to improve the efficiency of individual productions and supply chains. Digital technologies enable to streamline of business processes and increase the overall return on investment. There are many areas for the use of digital technologies, however, the maximum effect can be achieved only in the case of a comprehensive implementation of information systems – a complete digital transformation of individual companies and the whole industry.
Kazakhstan's mining and metallurgical industries face complex technological challenges and social responsibility for the closure of depleted mines and mining mono towns.
According to official data, about 8 thousand deposits are operating in Kazakhstan today. All of them were discovered back in the USSR times. But many of the deposits of lead, copper, and rare metals will be depleted in 10-15 years. Mine closures are associated with operational and social challenges. Once the mine is closed, the operating mining company is responsible for land and water reclamation as well as resolving environmental issues such as biodiversity conservation and restoration of pre-existing ecosystems. This is a technologically complex and costly process that is typically considered early in the design and development of a mine. Mine closures in Kazakhstan are a relatively recent development and practical experience in responsible mine closure is critical to the sustainability of the mining industry and society. Social challenges in Kazakhstan are especially acute in the areas where purpose-built mining mono-towns are facing unemployment and mass relocation. In the East Kazakhstan and Karaganda regions, closures of mines and mono towns have already begun. It is assumed that in 5-20 years many mines in the east of Kazakhstan will be closed. This leads to major socio-economic problems that need to be addressed urgently.