THE MINING POLICY IN KAZAKHSTAN: THE ROLE OF THE STATE
by Gulzhan Nurakhmet in Energy Politics Archives Autumn 2006
In this edition of our Working History series Gulza Nurakhmet reminds of the dangers of changeable and inconsistent mining policy that is characterized by frequent amendments and modifications, gaps and existing contradictions in legal arrangements, and considerable State overreach. Transitioning the State's role in the mining sector from being an "owner" to a "regulator" could significantly enhance security of tenure for investors. This shift would simplify the process by granting an automatic progression from exploration to exploitation rights, eliminating the inefficiencies of case-by-case negotiations. Such a framework aligns with the State's stated objective of promoting private sector development through its mining policies (MP).
Kazakhstan is blessed country for natural resources generally, especially for petroleum and mineral resources. While it is endowed with both petroleum and mineral resources, the country is however characterized by attracting investments mainly to the petroleum industry. The geological potential of its mining sector has not been commensurate with its potential. Kazakhstan has a world class mineral resource base. However reforms that are carried before have made little progress in achieving exploration objectives in its mining industry.
Other countries that have had similar challenges have successfully overcome them by starting a comprehensive ‘mining reform program’ from defining the role of State. As a result, re-determination of the role of State from ‘owner’ to ‘regulator’ led to mobilization of new investments to these countries. This Research paper intends to provide an analysis for answering vital questions of the current mining policy in Kazakhstan: what is the role of State and how can it stimulate new investments and create a more attractive mining policy? Contradictions in current legislation are analyzed and recommendations for attracting new investments in exploration and development of mines in the country are presented….
RECOMMENDATIONS:
Kazakhstan should improve legal framework governing mining activities for shaping Mining Policy, conductive to mineral development, drawing from the best experience of other countries. The most successful countries in attracting investments in their mining sectors are characterized by enabling investors to obtain exploration rights through a well defined policy, supported by a conductive legal and regulatory framework and transparent process: easily, quickly and at low cost. In this case the following fundamental changes which are the normal practice of the international experience would create forecasted favorable economic climate in Kazakhstan and promote further investments:
Encouraging investment possibilities by making geological data mainly available for the moderate price;
Creating mining cadastre which geographical areas which should be available and open to public consultation;
Lessening the time and cost for obtaining mineral title.
To attract foreign companies for investing in exploration and development of mines in country, State should set up a regime that is favorable to mining exploration investment. Elimination of contradiction in current legislation will appeal to potential foreign investment.
Read the full article here.
Update on the current current status of state ownership of petroleum and mining reserves in Kazakhstan
In Kazakhstan, the state still plays a significant role in managing petroleum and mining reserves through a combination of ownership rights, regulation, and oversight. Key aspects of state ownership and involvement include:
Petroleum Sector:
KazMunayGas (KMG), the national oil and gas company, has preferential rights in upstream contracts. These include the ability to take ownership stakes, participate in contracts, and manage assets in cases of contract termination. For offshore projects, KMG must hold at least a 50% interest in exploration and production operations
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The government has retained a strategic position in key hydrocarbon projects, particularly in offshore and large-scale ventures. However, private and foreign investors also play an active role under production-sharing agreements and other contracts
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Mining Sector:
The state has transitioned to a licensing regime for new mining operations, streamlining the process for subsoil use agreements. While state-owned enterprises are active, private sector involvement has been encouraged to develop reserves of critical minerals, such as copper, zinc, and rare-earth elements. However, some operational challenges, including local content requirements and environmental regulations, remain
Global Practice Guides
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Emerging Focus:
Kazakhstan is increasingly positioning itself as a global supplier of critical minerals vital for the energy transition, including lithium, nickel, and rare earths. Partnerships with foreign entities and government initiatives aim to expand the country’s mining capabilities
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Although the state retains substantial control, efforts are underway to modernize the sector by increasing transparency, improving investor confidence, and aligning with international standards to attract private investment. This dual strategy seeks to balance state interests with private sector dynamism.