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Kazakhstan Mining Report Q2 2009Published by: Business Monitor International Published: May. 13, 2009 - 53 Pages Table of Contents
AbstractThe global financial crisis is having a clear impact on the Kazakh mining industry, with leading minersEurasian Natural Resources Corporation (ENRC) and Kazakhmys both scaling back production asglobal metal demand falls. ENRC said that it would cut output of iron ore and ferrochrome during Q408,while Kazakhmys said it has stopped production at three mines and closed its Zhezkazgan smelter formaintenance. ArcelorMittal’s Kazakh subsidiary, ArcelorMittal Termirtau, has also stated that it seessales falling by 30% year-on-year (y-o-y) in 2008 due to falling demand. Kazakh Trade and IndustryMinister Vladimier Shkolnik also said that zinc producer Kazzinc could also halt production if pricescontinue to fall, while in December 2008, ShalkiyaZinc announced that it would suspend zinc and leadconcentrate production until mid-2009 due to plummeting metal prices.The government said in late January 2009 that it was considering granting mining companies a tax breakif they pledged not to sack workers. The announcement came after some multinational miners reportedlylobbied the government for a temporary reduction in mineral extraction taxes. The finance ministry putthe value of the cuts at around US$200mn, but at the time of going to press no final decision had beenreported. Kazakhstan signed an agreement with India on civilian nuclear co-operation in late January 2009, and isset to become the fourth country to supply India with uranium for nuclear power plants. In October 2008,the government signed a deal with China, agreeing to develop uranium resources in Kazakhstan as well asbuild power plants in China. The agreements came amid reports that Kazakhstan aims to become theworld’s leading supplier of uranium. Meanwhile, various sources suggest that the Kazakh government will create a new national holdingcompany, Tau Ken Samruk, to manage its mining assets and give it greater say in company takeovers. Itcould also act on behalf of the government in pursuing its pre-emptive rights to purchase subsurfaceassets. Unconfirmed reports suggest that the government approved the decision in late January 2009.Among the 10 largest countries in the world by area, the Republic of Kazakhstan spreads across north andcentral Eurasia and is home to a vibrant mining industry currently valued at over US$3bn. With largeendowments being mined across the nation, including 29 non-ferrous metals, three ferrous metals, twoprecious metals and 84 industrial minerals, it comes as no surprise that mining activity contributes closeto 30% of the country’s export earnings, and is responsible for 19% of all industrial production. An industry that was in disarray due to the break-up of the Soviet Union, Kazakh mining witnessedwidespread technological upgrades and privatisations in the 1990s. This was further fuelled in recentyears by spiralling international metal prices, rapidly expanding demand from China and India, andstreamlined procedures for obtaining permits and foreign investment. The country’s current reserve ofcopper is estimated at 36mn tonnes. Further, it ranks second globally in terms of manganese ore reserves,which are estimated at 600mn tonnes. Kazakhstan also hosts 30% of the worldwide chromite ore deposits,as well as 95% of the total chromium reserves within the Commonwealth of Independent States (CIS). Industry Forecast Despite the impact of the global fall in metals and commodity prices, BMI expects growth to be strong inthe Kazakh mining industry. By 2013, BMI forecasts that the market will be worth US$31.5bn, up from alevel of US$18.5bn in 2008. Get Full Details About This Report >> |
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