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Kazakhstan Mining Report Q2 2016

Kazakhstan Mining Report Q2 2016

BMI View: Kazakhstan's mining sector remains well placed for long-term expansion over the next fewyears, with the country taking advantage of its geographical location to position itself as an importantsupplier of commodities to the Asian and European markets. While we forecast the prices of key minedcommodities such as coal, copper and iron ore to remain weak through to 2020, the sector is well placed totake advantage of the upside and, in particular, renewed demand from the likes of China and India.

Strengthening trade links with these markets appear to support his strategy.

Latest Updates And Structural Trends

Despite ongoing weakness in global commodity prices we anticipate positive growth in Kazakhstan's coaland iron ore production in 2016 and through the remaining forecast period. We forecast coal output togrow by 1.9% a year on average over 2016-2020 to reach 143mn tonnes (mnt), while iron ore output willincrease by 1.2% to 28.1mnt.

Prices of both commodities will contract in 2016, with iron ore prices falling by 9.4% to USD48/tonneand thermal call slipping by 1.7% to USD59/tonne. The price of copper will also fall, decreasing by 1.7%to USD5,400/tonne.

The long-term growth of the mining sector will be supported by increased overseas demand as well as thegrowing needs of the domestic energy sector. The country's mining and energy sectors are attracting theattention of China and India and the Kazakhstani and Chinese governments recently signed agreementsworth USD5.1bn in the field of transport, energy, nuclear, metallurgical and chemical industries. Thisincludes the construction of a mining and metallurgical complex in Kazakhstan's Akmola region.

Furthermore, in January 2016, multinational steelmaker ArcelorMittal announced the divestmetn of itsKuzbass coal mines in Siberia to Russia's National Fuel Company (NTK) in January 2016. The movewill allow the company to focus on its Kazakh mining operations, which has recently undergone aUSD430mn expansion.


BMI Industry View
Table: Kazakhstan Mining Industry Value Forecast (2015
2020)
SWOT
Industry Forecast
Coal: Export Growth To Drive Production
Latest Updates
Table: Coal Production Forecast (Kazakhstan 2013
2020)
Structural Trends
Industry Set For Solid Growth
Iron Ore: China Partnership May Fuel LongTerm Growth
Latest Developments
Table: Iron Ore Production Forecast (Kazakhstan 2013
2020)
Structural Trends
Industry Risk Reward Ratings
Kazakhstan Risk/Reward Index
Rewards
Risks
Europe: Majority To Be Low RiskReward
Table: Europe
Mining Risk/Reward Index
Regulatory Development
Table: Kazakhstan
Mineral Extraction Taxes
Trade & Investment Risk Analysis
Commodities Forecast
Commodities Outlook
Table: BMI Commodities Price Forecasts
Competitive Landscape
Table: Largest Mining Companies
Eastern Europe
Company Profile
KAZ Minerals
Table: KAZ Minerals
Financial Results
Eurasian Natural Resources
Table: Eurasian Resources
Financial Results
Regional Overview
Methodology
Industry Forecast Methodology
Sources
Risk/Reward Index Methodology
Table: Weighting Of Indicators

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