Investment opportunities in Kazakhstans

mining sector
National Mining Company
Tau-Ken Samruk JSC

Macroeconomic overview
The economy of Kazakhstan is the largest
economy in Central Asia and one of the fastest
growing economy among the former Soviet Union
republics.
The mining industry, along with oil and gas,
dominates the Kazakhstani economy.
Kazakhstans economy is mainly export-oriented.
The major export product are natural resources.
The highly developed banking system, stable
institutions and investment-friendly government
policies further encourage foreign investment.
Foreign direct investments (FDI) into Kazakhstan
account for about 80 % of all capital inflows into the
Central Asian economies.

Nominal GDP growth dynamic, bln. USD

15,8%

16,1%
14,8%

13,6%

13,1%
11,5%

12,1%

12,5%

12,1%

127

104
81
18

22

25

31

2000

2001

2002

2003

57

43

2004

GDP, bln USD

2005

2006

2007

2008

6 761

9 859

5 050

2 625

5 414

6 643

7 593

2006

2007

2008

Mining industry, % of GDP

FDI inflows, bln. USD

Export breakdown in 2008

2%
4%

3 206

2%

1 381

4%

5 177

Mineral resources

1 759

Non-precious metals

15%

FMCG

73%

Chemical goods

2000

2001

2002

2003

Geological exploration

2004

1 414
1 682
3 522
2005

2 003

Crude oil production

Other

Other
Equipment

Investment opportunities in Kazakhstans mining sector

Investment attractiveness of Kazakhstani market

Dynamic economic growth;
Stable political system;
Skilled and relatively cheap labour. Kazakhstan was a pearl of mining industry in the former Soviet Union;
Attractive geographical location - close to the large markets of China and Russia;
Kazakhstan is a rich country in terms of volume and variety of mineral resources;
According to the analysis of World Bank and IFC, Kazakhstani tax regime is considered as the most
attractive among other CIS countries.
Tax regime attractiveness
In the global ranking
Tax payments
Number of corporate tax payments in year
Time spent on tax compliance
Number of hours spent per year on tax
compliance
Total tax rate (for payment of all taxes and
duties)
In percent of operating profit

Kazakhstan

Russia

Ukraine

Uzbekistan

49

134

180

162

16

70

178

179

111

155

172

68

65

123

147

173

Source: Paying taxes 2009 The global picture World bank, IFC
Investment opportunities in Kazakhstans mining sector

Metals and Mining industry

Kazakhstan has a long traditions of metals and mining production based on its reach geology. The country is
among the richest countries in terms of the volume and variety of natural resources. In terms of the mining
volumes Kazakhstan takes the 13-th place among the 70 world mining leaders. Kazakhstan possesses one of
the worlds biggest reserves of various metals and minerals including copper, iron ore, coal, gold, chromite,
lead, zinc, manganese, titanium, cadmium and uranium.
Kazakhstans share in the world reserves of metals:

Chromite ore - 30%

Manganese ore - 25%

Iron ore - 10%

Copper - 10%

Lead and Zinc - 13%

Currently Kazakhstan takes the 15-th place in the
world in terms of copper production, 7-th place
zinc, 8-th place lead, 3-rd place titanium, 13-th
place iron ore and 35-th place in terms of steel
production.

Investment opportunities in Kazakhstans mining sector

Potential for growth

Kazakhstani metals and mining industry still has considerable potential for further growth. Only 10%-15%
of Kazakhstans explored reserves are in operation.
Iron ore only 19 (out of 55) large deposits are in operation;
Manganese ore only 10 (out of 34) large deposits are in operation;
Chromite ore only 13 (out of 20) large deposits are in operation;
Gold only 75 (out of 282) deposits are in operation.

Currently Government is formulating a project of Accelerated Industrial and Innovative Development of

Kazakhstan for the period of 2010-2014. According to the program, metals and mining sector of Kazakhstan
should double its production and significantly increase share of value-added products by 2015. Total
volume of investments in metallurgical and infrastructural projects could potentially reach 13 bln. USD.

Investment opportunities in Kazakhstans mining sector

Tau-Ken Samruk company overview

History
JSC National Mining Company Tau-Ken Samruk was established under
the Resolution of the Government of the Republic of Kazakhstan dated
15 January 2009 No. 10. Tau-Ken Samruk is a national operator of
government assets in the metals and mining industry of Kazakhstan.
Mission statement
To promote the growth of Kazakhstan's economy and its competitiveness
through participation in exploration, mining and processing of solid
mineral resources projects in cooperation with private sector.
Strategic priorities
Improvement of subsoil use effectiveness by introducing innovative
technologies in exploration, mining and processing of solid mineral
resources , including unexplored deposits and technogenetic mineral
resources (industrial wastes).
Growth of metals and mining assets by restoration of distressed assets
value, costs optimization and use of higher level of mineral resource
processing.
Growth of government participation in metals and mining industry.

Investment opportunities in Kazakhstans mining sector

Activity instruments
Long-term strategic focus of Tau-Ken Samruk is the creation of vertically integrated national metals and
mining holding in Kazakhstan. Status of national company implies Tau-Ken Samruk a number of
advantages in operations on the Kazakhstani market.
Recently Ministry of Energy and Mineral Resources of Kazakhstan has imposed a range of restrictions on
subsoil use rights . Tau-Ken Samruk has Direct negotiations right with a competent body to get exploration
and mining rights for deposits that are in the State ownership.
Opportunity to exercise the State priority right to acquire the alienated subsoil use right (or a part
thereof) and (or) interest (block of shares) in legal entities that are subsoil users (according to Article 71 of
the Law of the Republic of Kazakhstan On subsoil and subsoil use).
Mandate to work with distressed companies/assets in metals and mining industry.
Management of the transferrable State blocks of shares/interests in metals and mining companies.

Investment opportunities in Kazakhstans mining sector

Sources of financing
Tau-Ken Samruk as Kazakhstani National Mining Company and 100% subsidiary of JSC National Welfare
Fund Samruk-Kazyna has following additional sources of external financing:
Financing from affiliated company Development Bank of Kazakhstan on favorable conditions;
Direct financing from JSC National Welfare Fund Samruk-Kazyna on early stages of investment

projects realization;
Attraction of direct investments through participation in authorized capital of subsidiaries of JSC TauKen Samruk;
Attraction of borrowings for investment projects realization purposes under corporate guarantee of

parental company JSC National Welfare Fund Samruk-Kazyna.

Investment opportunities in Kazakhstans mining sector

Opportunities for cooperation with Tau-Ken Samruk

The main opportunity for cooperation with Tau-Ken Samruk is the mutual realization of
mining projects on the basis of free nonoperating deposits in Kazakhstan

Advantages of mutual cooperation:

Realization of exploration and exploitation projects on the basis of deposits with high potential of
reserves discovery would allow to provide an additional resource base for current and prospective
metallurgical production facilities of both parties.
Introduction of new technologies aimed to increase mining and processing operations effectiveness.
Market capitalization growth for both companies .

Investment opportunities in Kazakhstans mining sector

Analysis of mineral base

Natural resource
type

Number of free
deposits

Gold

60

Coal

43

Titanium, zirconium

Iron, manganese

38

Bauxite

16

Molybdenum,
tungsten

16

Copper

79

Rare metals

16

Barite

Vanadium

Wollastonite

Tin

Nephelinic syenite

Chrome

10

Nickel

30

Tau-Ken Samruk has carried out an analysis of current situation of

Kazakhstans mineral base.
As a result, about 330 free non-operating deposits of solid mineral
resources have been defined.
In order to provide more detailed analysis of reserves potential
and geological structure of solid mineral resources deposits, 59
geological data packages were purchased from competent authority.
On the basis of current data of mineral base and trends in metals
and mining industry, Tau-Ken Samruk have conducted an analysis of
market conditions and prospects of industry development.

For the purposes of potential projects selection the list with

projects main criteria and requirements have been developed.

Investment opportunities in Kazakhstans mining sector

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Projects selection criteria

Compliance of the project to the main strategic goals of the
Company;
Availability of required minimum amount of reserves of solid
mineral resources and perspective of their increase;
Availability of industrial infrastructure, favorable geographic
location and economic environment in the deposit area (subsoil
object);
Favorable mining and technical conditions for the deposit
development;
Existence of the necessary financial, technical and labor resources,
high technical and economic parameters of the project.

Investment opportunities in Kazakhstans mining sector

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Potential partner selection criteria

The following criterias are designed for potential strategic partner (nonfinancial organization)
in case of mutual realization of the project
#

Requirements
to the
partner

Criteria

Sufficient experience in the metals and mining industry

Existence of sufficient financial, production and

technological resources

Availability of skilled personnel

Absence of significant borrowings

Lack of trials and collateral

Other requirements in accordance with internal acts of

Tau-Ken Samruk JSC

Investment opportunities in Kazakhstans mining sector

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Project implementation
When specifying the participation structure in the project Tau-Ken Samruk follows the
principle of own interests protection and respect of the interest of a potential partner. Project
participation and financing structure is specified on a case-by-case basis.
Realization of metals and mining projects with potential partner could be done under scheme
of cooperation, where Tau-Ken Samruk provides subsoil use rights and access to financing
sources, while strategic partner contributes to JV necessary funds, equipment and
technologies, experience and other material and nonmaterial assets.

Tau-Ken Samruk:
a) Subsoil use rights
b) Access to financing sources

Potential partner:
a) Funds
b) Expertise and technologies
c) Equipment and other assets

JV
metals and mining
project

Investment opportunities in Kazakhstans mining sector

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Disclaimer and Contacts

Contacts

Disclaimer
The information contained in this profile is
intended to provide prospective investors
with a preliminary understanding of the
investment opportunity.
Every potential investor must make its own
independent assessment of this opportunity.
Analytical materials are based on publicly
available resources that are believed to be
reliable, but we cannot claim that they are
absolutely correct.
We take no responsibility for the use of this
information.

Mr. Nurlan Zhakupov

Managing Director
JSC National Mining Company
Tau-Ken Samruk
Phone: +7 71712 500 651
Email: n.zhakupov@tks.kz
Mr. Yerlan Ramazanov
Head of Investment and Assets
Management Department
JSC National Mining Company
Tau-Ken Samruk
Phone: +7 7172 500 684
Email: e.ramazanov@tks.kz

Investment opportunities in Kazakhstans mining sector

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