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Mining industry
- Review on metallic ore mining (ferrous metals)
- Review on metallic ore mining (non-ferrous metals)
Review on metallic ore mining (ferrous metals)
1. Introduction.
Ore mining and smelting industry is the leading sector of the national economy, which accounts for 15.2% of total industrial production. Many ore and smelting plants are town-forming, and therefore the development of mining and metals sector is the development of cities, work places for more than 200 thousand people.
Mining and metals sector covers various activities beginning with geologic exploration and completing with finished products output and its promotion both to domestic and foreign markets, so some short reviews have been prepared.
The first part of this review describes the structure of the mining industry of Kazakhstan, then the internal market for ferrous metals extraction is examined, the key players and their market shares, as well as current barriers and limitations are specified, and the list of potential opportunities for entrepreneurial initiatives is given.
1.1. Structure of the sector
At the end of 2014 the volume of metallic ores extraction amounted to 882 332 mil. tenge, which was 135.5% when compared to 2010.
Table 1. The volume of metallic ores extraction in monetary terms during the period of 2010-2014, mln. tenge
|
2010 |
2011 |
2012 |
2013 |
2014 |
2014/2010, % |
Metallic ores extraction |
651198 |
798259 |
722893 |
789833 |
882332 |
135.5 |
Iron ores extraction |
258192 |
336399 |
235763 |
254452 |
223342 |
86.5 |
Extraction of nonferrous metal ores |
393005 |
461860 |
487130 |
535381 |
658990 |
167.7 |
Source: according to the Statistics Committee of the MNE of RK
In the overall structure of industrial production in Kazakhstan the share of metallic ores extraction accounted for 4.8% at the end of 2014, including the share of iron ore extraction - 1.2%.
Over the period of 2010 - 2014 the following products growth increased in volume terms in metallic ores mining: chromium concentrates - 127.8%; chromium ore -106.25%; iron ore - 102.2%.
The growth rates reduced for the following products: manganese concentrates - 97.2%; manganese ore - 86.0%.
Table 2. The volume of metallic ores extraction over 2010-2014
2010 |
2011 |
2012 |
2013 |
2014 |
2014/2010, % |
|
||||
Iron ores, thous. tons |
50401.5 |
51796.8 |
52613.6 |
51758.5 |
51501.9 |
102.2 |
||||
Manganese ores, thous. tons |
3041.8 |
2949.6 |
2975.0 |
2852.1 |
2617.3 |
86.0 |
||||
Manganese concentrates, thous. tons |
1099.9 |
1111.6 |
1070.5 |
1122.8 |
1069.69 |
97.2 |
||||
Chromium ores, thous. tons |
5091.8 |
5058.2 |
5233.1 |
5255.0 |
5410.4 |
106.25 |
||||
Chromium concentrates, thous. tons |
3502.0 |
3668.2 |
3945.6 |
4193.2 |
4476.1 |
127.8 |
||||
Source: according to the Statistics Committee of the MNE of RK
During 2014 the mining and metals sector of Kazakhstan attracted 566.8 bln. tenge of investments in fixed capital or 168% when compared to 2010. During 2014 the volume of own funds of enterprises in the fixed assets amounted to 368.4 bln. tenge (or 64.99% of the total investments in mining and metals sector), bank loans -26.4 bln. tenge (or 4.67%) and other investments - 171.9 bln. tenge (or 30.33%).
The share of metallic ores extraction amounted to 47.23% (or 267.68 bln. tenge) in the proportion of total investments in mining and metals sector of Kazakhstan.
(Iron ore extraction
Extraction of nonferrous metal ores
Production of cast iron, steel, ferrous alloys
Production of steel pipes, moldings and pipe fittings)
Picture 1. Structure of attracted investments in the fixed capital of mining and metal sector of Kazakhstan in 2014, %
Source: according to the Statistics Committee of the MNE of RK
In 2014 in metallic ores mining the investments in fixed capital for iron ore extraction amounted to 19.1% (or 51.3 billion tenge.). It should be noted that this trend was also observed in 2010.
In 2010 - 2014 the same trend was traced in the formation of sources of investments in fixed capital in mining and metals sector industry. Thus the largest share in the total investment in fixed assets falls on the own funds of enterprises. However during this period the share of the own funds of enterprises decreased due to the growth in the share of other borrowed funds, including foreign investment.
Investments in fixed assets of the sub-branches of mining and metals sector are mostly directed to the purchase of machinery and equipment, tools and facilities.
Analyzing the dynamics of foreign investment attraction in the mining and metals sector of RK it should be noted that the main purpose of the state is to achieve a favorable investment climate in the country and to promote the inflow of foreign direct investments into the economy of Kazakhstan. Thus according to the National Bank of Kazakhstan as of April 1, 2015 the gross inflow of foreign investments in Kazakhstan amounted to 25 923.6 million US dollars, including the extraction of metal ores - 6707.0 million US dollars (or 25.87% of all investments in the sector).
Picture 2. Gross inflow of foreign investment over 2015 year –April 1, 2015, mln. US dollars
Source: National Bank of RK
In the structure of gross inflow of foreign direct investment in the ore mining industry of Kazakhstan the leading position is taken by the Netherlands (27.9% of gross inflow of FDI in the mining industry), United Kingdom (18.8%), the USA (17.8%), China (11.6%) and Canada (7.9%).
Analyzing the job performance of the mining and metals sector of Kazakhstan over the period of 2010-2014 it should be noted that the actual number of employees increased from 678.0 thousand people in 2010 to 696.4 thousand people in 2014 or by 2.7% in the whole in the industry sector.
In the mining industry of Kazakhstan the actual number of employees grew at a faster pace and increased by 22.6% to 169.2 thousand people in 2010 to 207.5 thousand people in 2014.
However, in the metallic ores mining sector the staff listing grew at not such fast pace as in the mining industry of Kazakhstan in the whole. The staff listing increased from 72.7 thousand people in 2010 to 81.7 thousand people in 2014 or by 12.4%.
The number of employees in the metallic ores mining sector increased from 70.8 thousand people in 2010 to 78.2 thousand people in 2014, or a growth rate of actual number of employees amounted to 110.45% over the period of 2010 - 2014.
The difference between the staffing and actual number of employees in the metallic ores mining sector in 2014 indicated the presence of 3.5 thous. vacant positions. In 2010 this difference amounted to 1.9 thousand people, i.e., increased 1.8 times.
Exports of metals and their products over the period of 2011-2014 dropped from 9.7 bln. US dollars in 2011 to 6.7 bln. US dollars in 2014 or 70.1%.
The metals and their products in the general structure of Kazakhstan exports accounted for 11.5% in 2011, 8.5% - in 2014, or the share of industry decreased by 3.0%.
The ratio of exports to the CIS and non-CIS countries amounted to 25.4 and 74.6% respectively in 2011; 29.3% and 70.7% respectively in 2014, i.e. over the period of 2011-2014 there were the tendency of growth in exports to the CIS countries and decrease in exports to the rest of the world.
Table 3. The structure of exports of metals and their products over January –December of 2011-2014, thous. US dollars
Customs commodity code |
Commodity group name |
Exports, thous. dollars |
Exports, % of the total |
||||
Total |
including |
Total |
among them |
||||
CIS countries |
Other countries |
CIS countries |
Other countries |
||||
|
RK exports |
|
|
|
|
|
|
|
2011 |
84335892.4 |
11972305.1 |
72363587.4 |
100.0 |
100.0 |
100.0 |
|
2012 |
86448837.8 |
11417775.2 |
75031062.6 |
100 |
100.0 |
100.0 |
|
2013 |
84700374.0 |
10881469.2 |
73818904.7 |
100.0 |
100.0 |
100.0 |
|
2014 |
79459858.0 |
11052517.4 |
68407340.6 |
100.0 |
100.0 |
100.0 |
|
2014/2011, % |
94.2 |
92.3 |
94.5 |
0.0 |
0.0 |
0.0 |
25-27 |
Mineral commodity |
|
|
|
|
|
|
|
2011 |
66620226.0 |
6541638.7 |
60078587.3 |
79.0 |
54.6 |
83.0 |
|
2012 |
67326453.3 |
5699830.6 |
61626622.7 |
77.9 |
49.9 |
82.1 |
|
2013 |
67872442.3 |
4 977119.0 |
62895323.3 |
80.1 |
45.7 |
85.2 |
|
2014 |
63890503.0 |
4 769 362.0 |
59121141.0 |
80.4 |
43.2 |
86.4 |
|
2014/2011, % |
95.9 |
72.9 |
98.4 |
1.4 |
-11.4 |
3.4 |
Source: according to the Statistics Committee of the MNE of RK
Kazakhstan export of primary goods of mining and metals sector to the Customs Union countries in 2014 amounted to 1.26 billion US dollars or 49.5% of the total primary exports of Kazakhstan to the Customs Union countries.
The structure of exports included non-sintered iron ores and concentrates, except for calcined pyrite; sintered iron ores and concentrates, except for calcined pyrite; chromium ores and concentrates; copper ores and concentrates; manganese ores and concentrates, including ferrous manganese ores and concentrates.
Table 4. The structure of exports of raw materials of mining and metals sector of RK to the Customs Union countries in 2014
mln. US dollars |
in % of the total volume of primary goods export |
2014, in % as compared to 2013 |
|
Primary goods of RK - total |
2 540.4 |
100.0 |
93.2 |
Among them: |
|
|
|
Non-sintered iron ores and concentrates, except for calcined pyrite |
377.1 |
14.8 |
68.8 |
Sintered iron ores and concentrates, except for calcined pyrite |
346.2 |
13.6 |
119.3 |
Chromium ores and concentrates |
198.6 |
7.8 |
85.3 |
Manganese ores and concentrates, including ferrous manganese ores and concentrates |
70.7 |
2.8 |
75.0 |
Source: according to the Statistics Committee of the MNE of RK
Imports of metals and their products over the period of 2011-2014 increased from 3.7 bln. US dollars in 2011 to 4.3 bln. US dollars in 2014 or 116.3%.
The metals and their products in the general structure of Kazakhstan imports accounted for 10.1% in 2011, 10.5% - in 2014, or the share of industry increased by 0.4%.
The ratio of imports from the CIS and non-CIS countries amounted to 55.6 % and 44.4% respectively in 2011; 50.7% and 49.3% respectively in 2014, i.e. over this period there were the tendency of growth in imports from the rest of the world.
Table 5. The structure of imports of the Republic of Kazakhstan according to main commodity groups over the period of 2011-2014, thous. US dollars
Customs commodity code |
Commodity group name |
Imports, thous. dollars |
Imports, % of the total |
||||
Total |
including |
Total |
among them |
||||
CIS countries |
Other countries |
CIS countries |
Other countries |
||||
Total imports of RK |
|||||||
2011 |
36905784.5 |
18862325.6 |
18043458.8 |
100.0 |
100.0 |
100.0 |
|
|
2012 |
46358407.6 |
22112561.1 |
24245846.5 |
100.0 |
100.0 |
100.0 |
|
2013 |
48805568.4 |
22672082.6 |
26133485.8 |
100.0 |
100.0 |
100.0 |
2014 |
41295479.9 |
17 547 028.5 |
23748451.4 |
100.0 |
100.0 |
100.0 |
|
2014/2011, % |
111.9 |
93.0 |
131.6 |
100.0 |
100.0 |
100.0 |
|
25-27 |
Mineral commodity, among them |
||||||
2011 |
5384080.2 |
5118634.2 |
265446.0 |
14.6 |
27.1 |
1.5 |
|
|
2012 |
5671237.9 |
5369685.5 |
301552.4 |
12.2 |
24.3 |
1.2 |
|
2013 |
3090652.7 |
5746578.9 |
344073.8 |
12.5 |
25.3 |
1.3 |
2014 |
3012261.3 |
2692827.3 |
319434.0 |
7.3 |
15.3 |
1.3 |
|
2014/2011, % |
55.9 |
52.6 |
120.3 |
50.0 |
56.5 |
-0.2 |
Source: according to the Statistics Committee of the MNE of RK
Kazakhstan import of primary goods of mining and metals sector to the Customs Union countries in 2014 amounted to 277.7 million US dollars or 34.0% of the total primary exports of Kazakhstan to the Customs Union countries.
1.2. Internal market capacity.
The formation of the market capacity of the products of mining and metals sector and its growth rate were influenced by both external (changes in the world market conjuncture for the products of the sector) and internal factors, determined by the prospect for the development of certain domestic enterprises and national economy branches.
The highest level of the market capacity of steel industry products in 2014 is observed in the following products:
Ferrous alloys - market capacity is 489 774.4 tons, or increased by 22.51% when compared to 2010.
Table 6. Market capacity and steel industry products consumption in RK over the period of 2010 - 2014, tons
Ferrous alloys |
|||
|
2010 |
2014 |
2014 compared to 2010, % |
Market capacity |
399 768.40 |
489 774.40 |
122.51 |
Production |
1 701 790.00 |
1 715 137.00 |
100.78 |
Import |
16 062.70 |
19 720.40 |
122.77 |
Consumption |
399 768.40 |
489 774.50 |
122.51 |
Export |
1 318 084.30 |
1 245 083.00 |
94.46 |
Pellets and dust made of steel-making iron, mirror iron, steel |
|||
|
2010 |
2014 |
2014 compared to 2010, % |
Market capacity |
2 164 014.40 |
1 174 399.40 |
54.27 |
Production |
2 163 547.00 |
1 174 452.00 |
54.28 |
Import |
1 207.40 |
987.2 |
81.76 |
Consumption |
2 164 014.40 |
1 174 399.40 |
54.27 |
Export |
740 |
1 039.80 |
140.51 |
Source: according to the Statistics Committee of the MNE of RK
2. Number of enterprises (players) in the market.
As of January 1, 2015 79 large and medium-sized enterprises (excluding small businesses) operated in the metallic ores mining, including 10 enterprises in the iron ores extraction.
The number of players in the regional context of Kazakhstan had the following characteristics:
- 2 enterprises operated in the extraction and enrichment of iron ores (CCEA 271) in Karaganda region, and by 1 enterprise - in Jambyl, Aktobe, Kostanay, Akmola regions and in Astana city;
The largest enterprises in the field of steel industry were “ArselorMittal Temirtau” JSC, “Casting” LLP, “KSP Steel” LLP.
“ArselorMittal Temirtau” JSC is the largest enterprise of the ore mining and smelting industry of the Republic of Kazakhstan, presenting integrated mining and metals sector with its own coal, iron ore and power base.
“Casting” LLP includes three metallurgical productions - steelmaking plant in Pavlodar, copper smelting plant and non-ferrous metal working plant in Almaty. They produce a wide range of products of ferrous and non-ferrous metals: steel feeds, grinding balls and bars, reinforcing bars, cathode copper and copper ware, bronze, brass, aluminum and lead alloys.
“KSP Steel” LLP is the first Kazakhstan enterprise for production of seamless steel pipes for the oil and gas industry.
3. Barriers and limitations.
Technical barriers. “The list of technical barriers in trade includes REACH system and “scientifically unreasonable classification of nickel salts” in the EU, and compulsory certification of certain types of metal products in India.
In accordance with the EU regulations №1907/2006, entered into force on June 1, 2007, the EU introduced a technical barrier in respect of chemicals - REACH system (Registration, Evaluation and Authorization of Chemicals). The purpose of regulation is improvement of health care level, environment protection, use of non-hazardous substitutes instead of potentially hazardous chemical substances, and competitive growth of European industry, primarily the chemical industry.
This regulation obliges the EU producers to register all chemicals (both produced in the EU and imported), traded in the EU territory in the amount of more than one ton per year, in the European Chemicals Agency. This limits the number of imported goods, mainly chemical, petrochemical and metallurgical ones.
Upon registration the European Chemicals Agency checks the declared data, and makes the expertise of provided samples (assesses the compliance with minimum safety requirements) and asks for additional information. The substances, successfully passed the registration procedure, receive a unique registration number, which together with the detailed information is recorded in the database of the European Chemicals Agency.
The fact that the uniform rules for goods classification for “substances”, “preparations”, “semi products” and “articles” (the REACH is not applied to the latter one) are not developed within the REACH system proves that the system can be considered the import restriction mean. When assigning a specific type of metal products to any of the above groups the European Chemicals Agency uses “EUROFER position paper determining the borderline between preparations / articles for steel and steel products” document or asks for advice of this confederation. Thus the possibility and conditions of access of metal industry products of the CIS countries to the EU market are determined by their main competitor. Such advices, according to the industry players, are impossible, because under classification of goods the competitive organizations get access to the information, transferred by producers to the European Chemicals Agency and containing trade secrets: compositions, know-how, technology and production secrets and others.
In addition the complications of the REACH procedures and obvious imperfections of the regulatory framework, a restrictive effect on imports, including metallurgical products, exercise costs for registration. The exporter should pay 100-300 thousand Euros per one substance, depending on the tonnage and substance class.
The structure of the costs for EU market entry due to the introduction of the REACH system consists of the registration fee and additional expenses.
Table 7. Registration fee as of March 23, 2014
Annual tonnage |
Registration fee, Euro |
|
Individual registration |
Co-registration |
|
More than 1000 tons |
33 201 |
24 901 |
100-1000 tons |
12 317 |
9 237 |
10-100 tons |
4 605 |
3 454 |
1-10 tons |
1 714 |
1 285 |
Source: support web-site of Russian exporters Reach.ru,2014
Restrictive measures, applied by the third countries to the goods of the member-states of the Eurasian Economic Union, including Kazakhstan
According to the Report of the Eurasian Economic Commission as of December 2014 128 action measures have been identified, that exert or can exert a negative influence on the conditions of access of goods of the member-states of the Customs Union and the Common Economic Space (hereinafter - the Customs Union and the CES) to the third markets.
61% of them (78 action measures) are market protection measures - antidumping, protective, special or countervailing measures, including relevant conducted investigations.
Among other measures, operated in the third markets, it is possible to assign higher ones than excise taxes, prohibitions (the threat of bans introduction) on import, quota restrictions on imports, including tariff quotas, fees, SPS and TBT - measures and other non-tariff administrative measures, applied to domestic goods.
These measures are applied to 27 markets, 20 of which are related to non-CIS countries and 7 - to the post-Soviet countries.
The largest number of measures among the non-CIS countries are applied in the EU (21 measures), India (17 measures) and the USA (10 measures).
Among the CIS countries the principal amount of the restrictive measures accounted for the share of Ukraine (20 measures) and Uzbekistan (7 measures).
Depending on their influence on export from the member-states of the Customs Union and the CES the applied measures can be divided into trade barriers, potential trade barriers and restrictive measures.
For example, 75 measures can be allocated to trade barriers, providing in practice a negative impact on exports from the member-states of the Union. They include antidumping measures and special protective measures (in cases when the introduced duties affect the delivery of goods from the member-states of the Customs Union and the CES), prohibitions and restrictions within the SPS and TBT-measures, discriminatory excise taxes and duties, quantitative restrictions, as well as other administrative measures[1].
The restrictive measures include measures, whose direct negative impact on the export from the member-states of the Union has not yet been revealed, as well as measures of the third countries in respect of goods, the supply of which to these countries from the member-states of the Union is currently absent or insignificant. This category includes 30 measures.
Table 8. Trade barriers, operated in third markets in respect of the goods of the member-states of the Customs Union and the CES in 2014
Country, where the measure is applied |
Measures description |
Azerbaijan |
Application of the increased rate of excise duty to a number of imported goods. |
Argentina |
Since February 1, 2012 the import of any goods to Argentina can be carried out only after obtainment of the non-automatic license. Issuance of the license can be linked with the reception of obligations from the exporter on voluntary limitation of the volume or value of exports, investment in Argentine economy, and other restrictions. |
Argentina |
Since March 2011Argentina has applied an unpublicized rule, under which the major importers are obliged to present in the prime import declaration the detailed program, compensating import through export supplies. Nowadays the companies, who are eager to import finished products or parts to the country, are obliged to sign an agreement with the Government on the mandatory export of Argentine goods to a certain amount. |
Brazil |
Antidumping measure in respect of magnesium metal from the Russian Federation. The expiry date is 2017. |
USA |
Antidumping measure in respect of silicon manganese from the Republic of Kazakhstan. The expiry date is 2018. |
Barriers in the EEU market
According to the EDB Center for Integration Studies (hereinafter – EDB CIS) “the trade within the Eurasian Union is not so successful. Non-tariff barriers increase the business expenses by 15-30% of the value of goods produced in partner countries of the Eurasian Union. The report was prepared in the end of 2014 based on the survey of 530 Russian, Kazakh and Belarusian companies-exporters[2].
During report preparation such non-tariff barriers as sanitary and phytosanitary restrictions, quotas, subsidies to domestic producers, were examined. The measures affecting competition were also studied: limitation of access of foreign companies to public procurement and the institution of special importers, solely authorized to import goods, analogues of which are made by the domestic industry.
Among the main barriers to entry the market of Kazakhstan and Russia Belarusian companies identified the absence of VAT recovery for fuel, limited insurance coverage (up to 3 thousand Euros) in Russia by the green card, operating limits, a large number of fines and inspections.
During transportation from the third countries to Russia and Kazakhstan the respondents referred the number of issued permits, residence principle upon customs clearance of goods to the main restrictions.
Kazakhstan respondents mentioned a large number of checks and fines of transport inspection and state automobile inspectorate under implementation of cargo transportation to Russia. At the same time all Kazakhstan companies pointed out the lack of barriers and restrictions for international transportation in Belarus.
In addition Belarusian companies face significant expenses of measures, taken by Kazakhstan and Russia to limit the access to government procurement.
Inside the EEU the partner countries agreed on non-application of non-tariff regulation measures on May 29, 2014. Tariff barriers were removed formally in 2011.
Under economic crisis conditions the EEU authorities are forced to increase non-tariff barriers. Western sanctions and Russian embargo also force Russia to protect the interests of domestic producers as it is impossible to develop import substitution in the open market, even if the partners are located within common customs space.
A huge difference in tax rates, differences in the laws and procedures, regulating the entrepreneurial activity and competition, the difference in the rates of currency and inflation, as well as absence of the common currency union contribute to the preservation of barriers. The Eurasian Union should become fully functioning not earlier than 2025, it follows from the agreement on EEU establishment”.
4. List of potential opportunities for entrepreneurial initiatives. The structure of the value chain.
Existing breaks in the value chain of steel industry products
Evaluation of processing stages in the steel industry of Kazakhstan, which was applied to a wide range of products of mining and metals sector on the basis of information provided by the Statistics Committee of the MNE of RK from “Resources and the use of certain types of products (goods) and raw materials in the Republic of Kazakhstan” regulation, has shown that at its initial processing stages (production of cast iron and steel) there is a high degree of satisfaction of national economy branches with these products. However, at the stage of production of various types of rolled steel, despite of the wide range of products, there are problems in incomplete satisfaction of the demand of the national economy branches.
Table 9. Existing breaks (blind spots) in the value chain of steel industry products
1 stage |
2 stage |
3 stage |
4 stage |
Ore mining |
Ore dressing |
Cast iron production |
Steel production |
Iron ore |
Iron concentrate |
Pellets and dust made of steel-making iron, mirror iron, steel (CPEA 241014) |
Unalloyed crude steel or steel in other primary forms and semi-finished products made of carbon steel (unalloyed) (CPEA 241021) |
|
|
Unalloyed steel-making iron, containing more than 1 %wt of silicon |
Stainless crude steel or steel in other primary forms and semi-finished products made of stainless steel (CPEA 241022) |
Source: according to the Association of mining and metallurgical enterprises
The reasons of existing breaks in the value chain of production of mining and metals sector
The main reasons of the existing breaks in the value chain of production of mining and metals sector include the following:
1) Lack of reasonable state program for the value chain development in the mining and metals sector of Kazakhstan within the first State program of industrial and innovative development of Kazakhstan for 2010-2014. (SPAIID);
2) Lack of experience when identifying value chain breaks that did not allow to include specific measures for their development to the first SPAIID;
3) Priority directions in the value chain development and in other manufacturing industries of Kazakhstan, were determined not by scientifically-based economic methods but instinctively, that did not allowed to develop necessary value chains within first SPAIID, which really were in high demand in the sectors of Kazakhstan national economy;
4) SPAIID development was carried out till the adoption of normative legal acts, regulating the issues of state support of industrial and innovative activity (law of RK “On state support of industrial and innovative activity”; “Productivity 2020” comprehensive support program of enterprises, rehabilitation program, “Business Road Map 2020”) that did not allow to stimulate the processes of the value chain development by small and medium-sized enterprises;
5) Within the Industrialization Map for 2010-2014 in the sphere of mining and metals sector there is the raw material orientation of implemented investment projects. Among the total number of projects there are only 14 projects for high value-added products output for a total amount of 54493 mln. tenge or 8.6% of the total volume of financing of the implemented projects in the sphere of mining and metals sector. A similar trend is observed within the second Industrialization Map for 2015 -2019.
6) Unprofitability for foreign investors to develop the value chain in Kazakhstan, especially in the steel industry of the country, due to unfavorable world market conjunction for mining and metals sector production, obtainment of more profits through the sale of ferrous and non-ferrous metals, rather than through the sale of high value-added products.
5. Strengths of the sector.
Mining and smelting industry is one of the most important industries, which on a par with oil and gas industry and energy determines the economic, social and technological development of the Republic of Kazakhstan. Long-term forecasting and discovery of innovative capacity of technological directions are the priorities for the successful planning of industry development.
Mining and smelting industry of Kazakhstan has a number of favorable conditions for successful industry development in the long run, among which are the following:
- transport and geographical location of enterprises and access to global markets (closeness of the country to South-East Asia and Russia, the large exporting companies also have branched access to EU and US markets);
- availability of energy recourses and own raw material base, represented by ores of ferrous and non-ferrous metals, baking coal, rare metals, rare-earth metals, radioactive and precious metals;
- availability of a strong industrial base and developed infrastructure of enterprises with specialized research centers (factory laboratories);
- foreign investment attractiveness of the industry;
- existing raw material orientation of the economy in the absence of any processing stages.
Table 10. Strengths of the legislation and government regulation:
- availability of sufficiently complete national legislation in various spheres; - availability of approved fundamental strategic and program documents; - availability of a variety of measures of the state support for businesses in the mining and metals sector; - availability of necessary legal framework and infrastructure for the development of domestic processing and production of high value-added products in the metal industry. |
Source: according to the Association of mining and metallurgical enterprises
Table 11. Strengths of the geological exploration, ore mining and dressing
- strategic role of the mining industry for GDP volume provision; - availability of knowledge and technologies in the field of geology, geophysics, geochemistry and mining; - the Republic takes a leading position in terms of reserves of manganese and chromium ores, and occupies the first place in uranium mining; - availability of necessary human resources; - availability of the updated mapping information with projected resources of commercial minerals; - application of ecologically clean, safe technologies of mining and technologies of complete extraction of all components. |
Source: according to the Association of mining and metallurgical enterprises
[1]Source www.eurasiancommission.org/.
[2]Source:www.eabr.org/r/research/analytics/centre/projects/integration_barometer/.
Review on metallic ore mining (non-ferrous metals)
1. Introduction.
Ore mining and smelting industry is the leading sector of national economy which accounts for 15,2% of factory output. The majority of enterprises are local economic mainstays, therefore they provide urban development of cities, workplaces for more than 200 thousand people.
Ore mining and smelting complex covers various activities, from geological exploration to production of finished goods and their promotion both on domestic and outer markets therefore there prepared several short reviews.
In the first part of this overview there is a description of structure of mining industry of Kazakhstan, domestic market on production of non-ferrous metals, the main participants and their share in the market, existing barriers and restrictions and the list of potential opportunities for entrepreneurial initiatives.
1.1. The structure of industry
Following the results of 2014 overall production of metal ore amounts to 882 332 million tenge or 135,5% with the level of the year 2010.
Table 1. Overall production of metal ore term for 2010-2014 in value terms, million tenge
|
2010 |
2011 |
2012 |
2013 |
2014 |
2014/2010, % |
Metal ore extraction |
651198 |
798259 |
722893 |
789833 |
882332 |
135,5 |
Iron ore extraction |
258192 |
336399 |
235763 |
254452 |
223342 |
86,5 |
Extraction nonferrous metal ores |
393005 |
461860 |
487130 |
535381 |
658990 |
167,7 |
Source: Committee on Statistics of the Ministry of National Economics of the Republic of Kazakhstan
Following the results of 2014 in general structure of industrial production of Kazakhstan metallic ore mining amounts for 4,8%and non- nonferrous metal ores mining amounts for 3,6%.
For 2010 - 2014 in metallic ore mining there increased production of the following types of ore: copper concentrate – 496,9%; copper ore– 121,9%; copper in a copper concentrate – 121,1%, auriferous ores – 113,6%; lead in lead concentrate – 104,7%; lead-zinc ore – 101,6%.
There decreased production of the following types of ore: lead concentrates– 98,9%; copper-zinc ores– 89,0%; auriferous concentrates– 88,76%; aluminum ores (bauxites) – 85,0%; zinc in a zinc concentrate-85,7 of %; zinc concentrates– 84,9%.
Table 2. Overall production of metal ore term for 2010-2014
2010 |
2011 |
2012 |
2013 |
2014 |
2014/2010, % |
|
Copper ore, thousands tons |
31710,0 |
34491,6 |
38905,8 |
41731,7 |
38660,6 |
121,9 |
Copper concentrates, thousands tons |
1873,6 |
|
4524,0 |
7121,5 |
9309,6 |
496,9 |
Zinc-lead ore, thousands tons |
6555,8 |
7094,2 |
7701,0 |
7255,7 |
6662,7 |
101,6 |
Copper concentrate copper, thousands tons |
380,0 |
349,2 |
419,2 |
442,2 |
460,3 |
121,1 |
Copper-zinc ores, thousands tons |
4785,8 |
4857,6 |
4828,2 |
4909,9 |
4260,2 |
89,0 |
Aluminum ores (bauxites), thousands tons |
5310,4 |
5495,3 |
5170,2 |
5192,8 |
4514,6 |
85,0 |
Auriferous ores, thousands tons |
13995,1 |
14743,9 |
13541,5 |
14133,1 |
15896,6 |
113,6 |
Auriferous Concentrates, thousands tons |
129,1 |
158,2 |
132,4 |
178,5 |
114,59 |
88,76 |
Lead concentrates, thousands tons |
77,2 |
79,0 |
91,7 |
83,840, |
76,35 |
98,9 |
Lead in a lead concentrate, thousands tons |
36,1 |
34,6 |
38,1 |
40,8 |
37,8 |
104,7 |
Zinc concentrates, thousands tons |
803,5 |
700,3 |
736,3 |
707,5 |
681,9 |
84,9 |
Zinc in a zinc concentrate, thousands tons |
404,5 |
350,4 |
369,7 |
361,1 |
346,6 |
85,7 |
Source: Committee on Statistics of the Ministry of National Economics of the Republic of Kazakhstan
In 2014 MMC of the Republic of Kazakhstan raised investments into fixed capital in the amount of 566,8 billion tenge or 168% in comparison with 2010. In 2014 the amount of own funds of enterprises in fixed capital made 368,4 billion tenge (or 64,99% of the total amount of investments into MMC), bank credits - 26,4 billion tenge (or 4,67%), other investments - 171,9 billion tenge (or 30,33%).
The percentage of metallic ore mining in the total volume of investments into MMC amounts to 47,23% (or 267,68 billion tenge).
The largest volume of investment into fixed capital in metallic ore mining in 2014 accounts for production of non-ferrous metals – 80,9% (or 216,4 billion tenge). It should be noted that this trend was observed also in 2010.
In 2010 – 2014 the same situation was with finding sources of investments into fixed capital of MMC industries. So, in the total amount of investments into fixed capital the greatest percentage is the share of own funds of enterprises. However for this period the percentage of own funds of enterprises decreased due to increased percentage of other loan resources, including foreign investments.
On the whole investments into a property of MMC subindustries in the majority were made in purchase of machines, equipment and tools.
As for job performance of MMC of Kazakhstan for 2010-2014, it should be noted that actual number of personnel increased from 678,0 thousand people in 2010 to 696,4 thousand people in 2014 or for 2,7%.
Actual number of personnel in mining industry of Kazakhstan increased by 22,6% from 169,2 thousand people in 2010 to 207,5 thousand people in 2014.
However headcount in metallic ore mining increased not at such higher rates as in mining industry of Kazakhstan in general. Headcount increased from 72,7 thousand people in 2010 to 81,7 thousand persons in 2014, or for 12,4%.
The number of people involved in metallic ore mining increased from 70,8 thousand people in 2010 to 78,2 thousand people in 2014 or rate of growth of actual number of personnel for 2010 - 2014 made 110,45%.
Difference between headcount and actual number of personnel in production of metal ores in 2014 confirmed availability of 3,5 thousand vacant positions. In 2010 this difference made 1,9 thousand people, i.e. increased by 1,8 times.
Export of metals and products for 2011-2014 decreased from 9,7 bln. US dollars in 2011 to 6,7 bln. US dollars or 70,1% in 2014.
The percentage of metals and products in 2011 in export of Kazakhstan at large made 11,5%, and 8,5% - in 2014, or the share of the sector decreased by 3,0%.
The ratio of export to CIS countries and foreign countries in 2011 made 25,4 and 74,6% respectively; in 2014 - 29,3% and 70,7% respectively, i.e. for the period of time from 2011 to 2014 there was a trend towards growth of export of products in CIS countries and decrease in export to other countries of the world.
Export of primary goods of MMC to the countries of Customs union in 2014 made 1260 mln. US dollars, or 49,5% of the total amount of primary export of the Republic of Kazakhstan to the countries of Customs union.
The structure of export of products of industry included ores and copper concentrates; zinc ores and concentrates; copper-mine tailings and scrapped metal.
Table 3. The structure of export of primary goods of MMC of the Republic of Kazakhstan in the countries of Customs Union in 2014
Mln. US dollars |
total exports of primary goods, % |
2014 2013, in % |
|
Primary goods of the Republic of Kazakhstan in total |
2 540,4 |
100,0 |
93,2 |
of them: |
|
|
|
Copper ores and concentrates |
161,2 |
6,3 |
82,2 |
Zinc ores and concentrates |
70,1 |
2,8 |
110,5 |
Сopper-mine tailings and scrapped metal |
36,2 |
1,4 |
67,4 |
MMC in total |
1260,1 |
49,5 |
86,9 |
Source: Committee on Statistics of the Ministry of National Economics of the Republic of Kazakhstan
Import of metals and products for 2011-2014 increased from 3,7 bln. US dollars in 2011 to 4,3 bln. US dollars or 116,3% in 2014.
The share of metals and products in general structure of import of Kazakhstan made 10,1% in 2011 and 10,5% - in 2014 or the share of industry increased by 0,4%.
The ratio of import from CIS countries and foreign countries in 2011 made 55,6% and 44,4%; in 2014 - 50,7% and 49,3%, i.e. for this period there was a trend towards growth of import from other countries of the world.
Import of primary goods of MMC in Kazakhstan to the countries of Customs union in 2014 made 277,7 mln. US dollars, or 34,0% of the total amount of export of primary goods of the Republic of Kazakhstan to the countries of Customs union.
The structure of import of products included other types of ore and concentrates of precious metals; lead ore and concentrates; zinc ore and concentrates.
Table 4. The structure of import of primary goods of Kazakhstan from the countries of Customs Union in 2014
|
2014 |
||
Mln. US dollars |
total exports of primary goods, % |
2014 2013, in % |
|
Primary products in total |
815,7 |
100,0 |
23,6 |
of them: |
|||
Other types of ore and concentrates of precious metals |
177,8 |
21,8 |
147,7 |
Lead ore and concentrates |
94,0 |
11,5 |
101,6 |
Zinc ore and concentrates |
5,9 |
0,7 |
78,8 |
MMC in total |
277,7 |
34 |
109,3 |
Source: Committee on Statistics of the Ministry of National Economics of the Republic of Kazakhstan
Import from other countries of the world includes small amounts of tantalum waste and scraped metal, copper and aluminum.
1.2. Capacity of domestic market.
External factors (change of world market conjuncture on production of industry) and internal factors, determined by prospect of development of separate domestic enterprises and industries of national economy influenced the formation of capacity of market of production of MMC and the rates of market growth.
The highest level of market capacity in non-ferrous metallurgy of Kazakhstan in 2014 was observed in the production of the following types of ore:
- Unrefined copper (including blister copper); anode copper for refinement of electrolytic anode, except cladding copper, anodes for application of electrolytic coating - market capacity 214 826,9 tons, or in comparison with 2010 - 68,63%.
- The highest growth rates of market capacity in non-ferrous metallurgy for 2010 - 2014 were characteristic of the following production:
- untreated and half-treated gold and gold in powder form – 188,3%;
- untreated lead - 152,83%;
- untreated and half-treated or gold in powder form -150,5%.
- Reducing market capacity in non-ferrous metallurgy on the following production:
- untreated tin - 60,88%;
- unrefined copper (including blister copper); anode copper for refinement of electrolytic anode, except cladding copper, anodes for application of electrolytic coating - 68,63%.
Table 5. The capacity of market and consumption of products of nonferrous metallurgy of the Republic of Kazakhstan for 2010 - 2014, tons
Untreated and half-treated silver or silver in powder form |
||||||
|
2010 |
2014 |
2014 by 2010, % |
|||
Market capacity |
29,9 |
0 |
0 |
|||
Production |
552,1 |
989,2 |
179,17 |
|||
Import |
6,8 |
2 |
29,41 |
|||
Estimation |
0 |
45 |
0 |
|||
Consumption |
29,9 |
0 |
150,50 |
|||
Export |
529 |
1 036,20 |
195,88 |
|||
Untreated and half-treated gold or gold in powder form |
||||||
|
2010 |
2014 |
2014 by 2010, % |
|||
Market capacity |
0,6 |
110,8 |
188,3 |
|||
Production |
30,3 |
50,3 |
166,01 |
|||
Import |
0,3 |
68,8 |
in 229,3 times |
|||
Consumption |
0,6 |
110,8 |
188,3 |
|||
Export |
30,0 |
8,3 |
27,67 |
|||
Untreated aluminum |
||||||
|
2010 |
2014 |
2014 by 2010, % |
|||
Market capacity |
2693,8 |
35961,2 |
In 13,3 times |
|||
Production |
227 309,00 |
209 252,00 |
92,06 |
|||
Import |
303,5 |
2 432,50 |
801,48 |
|||
Consumption |
2693,8 |
35961,2 |
In 13,3 times |
|||
Export |
224 918,60 |
175 723,30 |
78,13 |
|||
Aluminum powders and scales, except those for colorants and paints |
||||||
|
2010 |
2014 |
2014 by 2010, % |
|||
Market capacity |
1601,2 |
1395,3 |
87,14 |
|||
Production |
0 |
3 |
0 |
|||
Import |
1 601,20 |
1 392,30 |
86,95 |
|||
Consumption |
1 601,20 |
1 395,3 |
87,14 |
|||
Export |
0 |
0 |
0 |
|||
Untreated lead |
||||||
|
2010 |
2014 |
2014 by 2010, % |
|||
Market capacity |
11 837,60 |
18 090,90 |
152,83 |
|||
Production |
103 400,00 |
127 064,00 |
122,89 |
|||
Import |
478,4 |
451,9 |
94,46 |
|||
Consumption |
11 837,60 |
18 090,90 |
152,83 |
|||
Export |
92 040,80 |
109 425,00 |
118,89 |
|||
Untreated zinc |
||||||
|
2010 |
2014 |
2014 by 2010, % |
|||
Market capacity |
42 868,50 |
43 865,00 |
102,32 |
|||
Production |
318 858,00 |
324 946,00 |
101,91 |
|||
Import |
215,8 |
1 182,00 |
547,73 |
|||
Consumption |
42 868,50 |
43 865,00 |
102,32 |
|||
Export |
276 205,30 |
282 263,00 |
102,19 |
|||
Untreated tin |
||||||
|
2010 |
2014 |
2014 by 2010, % |
|||
Market capacity |
1 039,00 |
632,50 |
60,88 |
|||
Production |
0,0 |
41 |
0,0 |
|||
Import |
1 079,30 |
611,4 |
56,65 |
|||
Consumption |
1 039,00 |
632,50 |
60,88 |
|||
Export |
40,3 |
19,9 |
49,38 |
|||
Unrefined copper (including blister copper); anode copper for refinement of electrolytic anode, except cladding copper, anodes for application of electrolytic coating |
||||||
|
2010 |
2014 |
2014 by 2010, % |
|||
Market capacity |
313 003,30 |
214 826,90 |
68,63 |
|||
Production |
318 769,00 |
214 830,00 |
67,39 |
|||
Import |
0 |
0,9 |
0,0 |
|||
Consumption |
313 003,30 |
214 826,90 |
68,63 |
|||
Export |
5 765,70 |
4 |
0,07 |
|||
Unrefined copper and unrefined copper-alloys; addition copper-based alloys |
||||||
|
2010 |
2014 |
2014 by 2010, % |
|||
Market capacity |
46 459,50 |
39 203,20 |
84,38 |
|||
Production |
324 882,00 |
298 323,00 |
91,83 |
|||
Import |
1 387,30 |
998,2 |
71,95 |
|||
Consumption |
46 459,50 |
39 203,20 |
84,38 |
|||
Export |
279 809,80 |
260 118,00 |
92,96 |
|||
Source: Committee on Statistics of the Ministry of National Economics of the Republic of Kazakhstan
1. Untreated and half-treated silver and silver in powder form
Sales in the market of Kazakhstan of untreated and half-treated silver or silver in powder form in 2014 were reduced by 1,5 times in comparison with 2010 at the expense of available stocks in warehouses of MMC enterprises, considerable amounts of its export. In the domestic market this production in 2014 was not in the market.
Table 6. Sale of untreated and half-treated silver or silver in powder form
|
2010 |
Share ,% |
2014 |
Share,% |
2014/2010, % |
Sale in the market of the Republic of Kazakhstan |
29,9 |
5,3 |
0,0 |
0 |
0,0 |
Foreign sales |
529,0 |
94,7 |
1 036,2 |
100 |
195,9 |
Source: Committee on Statistics of the Ministry of National Economics of the Republic of Kazakhstan
Thus, foreign market remains the main potential market of this production in Kazakhstan as there are no conditions for further processing works.
While evaluating world silver market of silver "in new GFMS report there mentioned lack of silver supply (4.9 million ounces) in comparison with 2014, it is much less in 2013 in amount (-111.9 million ounces) due to significant increase in amounts of production up to 877,5 million ounces in 2014 in comparison with 832.5 million ounces in 2013
The total amount of offer in 2014 made 1,061.8 million ounces (growth from 1,000.5 million ounces in 2013), overall demand decreased by 1,066.7 million ounces, from 1,112.4 million ounces in 2013. However, some main components of overall demand for silver increased. Demand of jeweler industry hit new record high, and sales of table silver increased at most since 2006. It was followed by significant increase in demand in the main scope of silver application, including ethylene oxide, photo cells, solders and alloys.
Reduction of world demand is caused mostly by China as demand for jewelry and investment demand decreased, and as a result, India became the largest consumer.
Estimating new amounts of production, GFMS notes that in 2014 they increased for the 12th year in a row though now silver producers have an incentive for increasing production due to lack of increase in prices for metal.
GFMS notes that growth of production happens generally due to already ready new production site, mine Eskobal of Tahoe Resources company in Guatemala which is fully ready for operation and according to GFMS is considered the second-large silver mine in the world now.
As for investments in 2015 there were few receipts from fixed silver index assets that specifies that long-term holders of silver still work, sales of weak owners are not so successfull and compensated by storing of silver at low prices by strong silver investors".[1]
Thus, in the foreign markets other countries of the world can become potential markets of silver, namely regular consumers of this production of Kazakhstan:
1) Untreated silver (including silver with electroplated coating made of gold or platinum) in bullions with at least 999 silver parts: expansion of the market in Great Britain up to 250,0 kg (in 2014 there were delivered 243,7 kg of silver in the amount of 139685,3 thousand US dollars), in Switzerland up to 1000 kg (in 2014 there were delivered 790,9 kg in the amount of 323590,7 thousand US dollars);
2) Untreated silver (including silver with electroplated coating made of gold or platinum): expansion of the market in Great Britain up to to 0,2 g (in 2014 there were delivered 0,1 kg in the amount of 96565,2 thousand US dollars), in Switzerland up to 2,0 gr. (in 2014 there were delivered 1,5 kg in the amount of 1536554,7 thousand US dollars).
The are no barriers for sale of Kazakhstani silver in the markets of Great Britain and Switzerland for the period of 10 years as these countries are the main consumers of raw materials used in various industries of their national economy.
2. Untreated and half-treated gold or gold in powder form
Sale in the market of Kazakhstan of untreated and half-treated gold or gold in powder form in 2014 made 110,8 tons, or 188,3% in comparison with 2010. In the domestic market this production was utilized in the amount of 93,0% of market capacity. Sale of untreated and half-treated gold or gold in powder form is presented in Table 34.
Table 7. Sale of untreated and half-treated gold or gold in powder form
|
2010 |
Share, % |
2014 |
Share, % |
2014/2010, % |
Sale in the market of Kazakhstan |
0,6 |
1,9 |
110,8 |
93,0 |
188,3. |
Foreign sales |
30,0 |
98,1 |
8,3 |
7,0 |
27,7 |
Source: Committee on Statistics of the Ministry of National Economics of the Republic of Kazakhstan
If earlier considerable amount of Kazakhstani gold was refined in Switzerland, then now start-up of refinery plant "Tau-Ken Altyn" in December, 2013 led to decrease in the amounts of its export. The government took the steps to ban the export of alloy "Dore" for the purpose of utilization of refinery plant (till September 1, 2015). Proceeding from it, the domestic market of Kazakhstan will become the main potential market of untreated gold.
The rest of gold can be sold in the foreign markets which can be expanded due to expansion in deliveries to regular consumers of gold:
1) Powder made of gold which is not used for stamping of coins: due to increase in sales volume in Switzerland up to 120 kg (in 2014 there were delivered 110,7 kg in the amout for 1985,9 thousand US dollars); in Italy up to 4,0 kg (in 2014 there were delivered 3,9 kg in the amount of 104,3 thousand US dollars);
2) Other types of untreated gold in billots, with gold content at least 995 parts of gold for 1000 parts of alloy: due to expansion of sale in Switzerland up to 300 kg (in 2014 there were delivered 294,9 kg in the amount of 210,6 thousand US dollars); and also in Kyrgyzstan - up to 415 kg (in 2014 there were delivered 413,1 kg in the amount of 24677,5 thousand US dollars);
3) Other types of untreated gold: due to expansion of sale in Switzerland up to 1600 kg (in 2014 there were delivered 1584,9 kg in the amount of 35438,5 thousand US dollars); Germany to 415,0 kg (in 2014 there were delivered 411,6 kg in the amount of 9812,0 thousand US dollars); in Great Britain – up to 7,4 kg (in 2014 there were delivered 7,3 kg in the amount of 1,8 thousand US dollars);
There are no barriers for sale of Kazakhstani untreated and half-treated gold in the markets of Switzerland, Italy, Kyrgyzstan, Germany, Great Britain as for a long period of time these countries are considered the main consumers of raw materials where there are no similar production works.
3. Untreated aluminum
Sale in the market of Kazakhstan of untreated aluminum in 2014 made 35961,2 tons, or 1334,9% in comparison with 2010. In the domestic market this production was utilized in the amount of 17,0% of the market capacity, 83,0% were delivered on the foreign markets.
Table 8. Sale of untreated aluminium
|
2010 |
Share,% |
2014 |
Share,% |
2014/2010, % |
Sale in the market of the Republic of Kazakhstan |
2693,8 |
1,2 |
35961,2 |
17,0 |
93,0 |
Foreign sales |
224 918,6 |
98,8 |
175 723,3 |
83,0 |
78,1 |
Source: Committee on Statistics of the Ministry of National Economics of the Republic of Kazakhstan
The domestic market of Kazakhstan will be one of the potential markets of untreated aluminum, considering a great demand on this production, high sale rates, and also growing capacity of this production in the country. The internal demand will be formed by producers of cable and wiring production and rolled aluminum.
The markets of other countries of the world will be the potential markets of untreated aluminum. However in the world market of aluminum "in 2014 China increased its production capacities by 5 million tons and still plans to increase them by 3–4 million tons in 2015. It is expected that in the markets outside China earlier there could be enabled capacities in the amount of 350–370 thousand tons in 2015. Thus, the main risk for the prices for aluminum is growing export of half-stocks from China.
Now the award in London metal exchange (LME) is much more attractive, than the price in Shanghai Futures exchange (SHFE) that develops export from China. So, in 2014 net export of half-stocks from China increased by 20% - up to 3,1 million tons of aluminum, with peak heights in December. In the estimation of the specialists export in 2015 will grow by 11% up to 3,45 million tons. According to the overview of Morgan Stanley, in January, 2015 export from China reduced by 21% in relation to December, 2014[2].
Proceeding from it is possible to expand the potential sales of untreated aluminum in the foreign markets at the expense on account of the following production:
1) Untreated and not alloyed aluminum: due to increase in sales volume in the operating markets in the CIS countries and foreign countries. So it is necessary to expand in CIS countries operating market in Uzbekistan up to 25000 tons (in 2014 there were delivered 24768,9 tons in the amount of 3274,9 thousand US dollars); in Ukraine up to 2000 tons (in 2014 there were delivered 1746,1 tons in the amount of 3274,90 thousand US dollars), and also development of new markets in Turkmenistan, Kyrgyzstan, Azerbaijan.
In other countries of the world it is necessary to expand the market of Turkey up to 44300 tons (in 2014 there were delivered 44172,4 tons in the amount of 87267,4 thousand US dollars), and also in new markets of Iran and Afghanistan;
2) Other primary untreated aluminum alloys: it is offered to expand the operating market of other countries of the world, namely the markets of Germany – up to 350 tons (in 2014 there delivered 302,5 tons in the amount of 7373,9 thousand US dollars); in China - up to 250 tons (in 2014 there were delivered 192,4 tons in the amount of 5227,6 thousand US dollars); in Japan – up to 50 tons (in 2014 there were delivered 25 tons in the amount of 438,2 thousand US dollars) and also to master the new markets in the near-border countries –Turkey, Iran, Azerbaijan;
3) Secondary untreated aluminum alloys, in billots or in a liquid state and other secondary untreated aluminum alloys: it is offered to expand operating markets in Germany up to 100 tons (in 2014 there were delivered 90 tons in the amount of 79,4 thousand US dollars).
There are no barriers for sale of Kazakhstani aluminum in Uzbekistan, Ukraine, Turkmenistan, Kyrgyzstan, Azerbaijan, Iran, Afghanistan, Turkey as these countries for a long period of time are considered the main consumers of these raw materials which are processed into finished goods. In Uzbekistan, Ukraine, Turkmenistan, Kyrgyzstan, Azerbaijan, Iran, Afghanistan, Turkey there is no production of untreated aluminum due to the lack of own base of raw materials.
4. Untreated lead
Sale in the market of Kazakhstan of untreated lead in 2014 made 18090,9 tons, or 152,8% in comparison with 2010. In the domestic market this production is utilized in the amount of 14,2% of market capacity, 85,8% of products are exported.
Table 9. Sale of untreated lead
|
2010 |
Share, % |
2014 |
Share, % |
2014/2010, % |
Sale in the Republic of Kazakhstan |
11 837,6 |
11,4 |
18 090,9 |
14,2 |
152,8 |
Foreign sales |
92 040,8 |
88,6 |
109 425,0 |
85,8 |
118,9 |
Source: Committee on Statistics of the Ministry of National Economics of the Republic of Kazakhstan
Thus, foreign market will remain the main market of untreated lead. However according to normative changes of EU which will come into force in 2017 producers shall minimize emissions of lead; therefore some of them will be forced to suspend the productions.
"The share of processed metal in the world industry is high and it will be increased in the future as increasing demand for machines and electric bicycles leads to increase of amounts of processing of failed accumulators"[3].
"Demand for lead in economically developed regions of the world is stable, however soon developing countries will show high growth rates ".
Taking these into account, other countries of the world namely developing countries shall become the potential market of the following types of untreated lead:
1) Untreated refined lead: it is necessary to expand the operating market of Ukraine up to 30 tons (in 2014 there were delivered 21,0 in the amount of 44,5 thousand US dollars), and also to tap the markets of Uzbekistan, Tajikistan, Turkmenistan, Kyrgyzstan, Azerbaijan.
In other countries of the world it is necessary to expand the operating markets in Spain up to 100 thousand tons (in 2014 there were delivered 85386 in the amount of 157769,6 thousand US dollars); in China up to 25 thousand tons (in 2014 there were delivered 20270 tons in the amount of 42824,7 thousand US dollars); in Germany up to 65 tons (in 2014 there were delivered 56,8 in the amount of 149,8 thousand US dollars).
1) Untreated raw: to expand the markets of China up to 1800 tons (in 2014 there were delivered 1676,9 in the amount of 4469,3 thousand US dollars).
The are no barriers in sales of Kazakhstani lead in the markets of Uzbekistan, Ukraine, Tajikistan, Turkmenistan, Kyrgyzstan, Azerbaijan, Iran, Afghanistan, Turkey as these countries for a long period of time are the main consumers of this production and there is no production of output.
5. Zinc raw
Sale in the market of Kazakhstan of untreated zinc in 2014 made 43865 tons, or 102,38% in comparison with 2010. In the domestic market this production is consumed of 13,5% of market capacity, in the foreign market - 86,5%.
Table 10. Sale of untreated zinc
|
2010 |
Share, % |
2014 |
Share, % |
2014/2010, % |
Sales in the Republic of Kazakhstan |
42 868,5 |
13,4 |
43 865,0 |
13,5 |
102,3 |
Foreign sales |
276 205,3 |
86,6 |
282 263,0 |
86,5 |
102,2 |
Source: Committee on Statistics of the Ministry of National Economics of the Republic of Kazakhstan
Thus, Arselormittal Temirtau JSC which utilizes this metal for the production of zinc-coating will remain the main zinc consumer in Kazakhstan.
The most part of untreated zinc will be delivered in the foreign market. "Specialists of Nyrstar NV company predict increase in the prices for zinc by the end of 2015. The important role, in their opinion, plays work stoppage on the Century mine, expected by the end of the 3rd quarter of 2015. The mine located in Australia delivered on the market about 500 thousand tons of ore, and shortage of this amount of zinc just can result in the deficit in the market, and, therefore, in increasing in prices. Besides, the fact that it will influence the price of zinc producers of metal reduce quantity of products that can lead to predominance of demand over supply.
In the world market the prices for zinc begun to rise in 2014, its cost was raised approximately for 6%. First of all it happened after closing of several mines therefore universal production decreased and didn’t supply the demand in full. Besides, according to reports of London metal exchange, zinc stocks in warehouses were decreased since fall of 2010. On the other hand, demand for galvanized metals for 2014 has significantly grown. For example, galvanized steel sheet is high demand material in automotive industry and construction, and demand will constantly grow according to 2014 due to record-breaking amounts of world production of sheet made of galvanized steel.
Nyrstar company NV is the biggest producer of zinc in the world. His experts who have carried out monitoring in the market notified that if at the beginning of 2015 there the volume of deliveries of concentrate increases, then after closing of Century mine the situation will sharply change to the worst. Decrease in production on 500 thousand tons can lead to essential growth of price of ore and produced metal".[4]
Thus, it is necessary to expand the operating foreign markets on the following production:
1) Zinc raw, not alloyed, with zinc content 99,99%: to expand the markets in Ukraine up to 7000 tons (in 2014 there were delivered 6565,7 tons in the amount of 13377,7 thousand US dollars), and also in China - up to 190 thousand tons (in 2014 there were delivered 173630,2 tons in the amount of 359365,5 thousand US dollars); in Turkey – up to 90 thousand tons (in 2014 there were delivered 82925,1 in the amount of 170719,3 thousand US dollars). It is necessary to tap the markets of Uzbekistan, Azerbaijan, Iran;
1) Zinc waste and scrap: it is offered to expand the operating markets of Afghanistan up to 400 tons (in 2014 there were delivered 392,0 tons in the amount of 285,0 thousand US dollars); in Iran up to 50 tons (in 2014 there were delivered 13,0 tons in the amount of 13,7 thousand dollars). It is necessary to tap the markets of Uzbekistan, Azerbaijan, Iran, Iraq.
Considering the current situation in the world market of zinc, lack of similar productions, barriers in sale of Kazakhstani untreated lead in the markets of Uzbekistan, Ukraine, Tajikistan, Turkmenistan, Kyrgyzstan, Azerbaijan, Iran, Afghanistan, Turkey.
6. Unrefined copper (including blister copper); anode copper for electrolytic refinement, except cladding copper, anodes for application of electrolytic coating
Sale of unrefined copper in the market of Kazakhstan (including blister copper); anodes copper for electrolytic refinement, except cladding copper, anodes for application of electrolytic coating in 2014 made 214826,9 tons, or 68,6% in comparison with 2010.
In the domestic market this production in 2014 was consumed in the amount of 100% of capacity of its market.
Table 11. Sales of unrefined copper
|
2010 |
Share, % |
2014 |
Share, % |
2014/2010, % |
Sales in the Republic of Kazakhstan |
313 003,3 |
98,2 |
214 826,9 |
100,0 |
68,6 |
Foreign sales |
5 765,7 |
1,8 |
4,0 |
0,0 |
0,1 |
Source: Committee on Statistics of the Ministry of National Economics of the Republic of Kazakhstan.
Proceeding from it, the domestic market of Kazakhstan where the main consumers of copper are producers of copper rod, cablin and wiring production and alloys will remain the main potential market of this production:
- Kazakhmys Sales Limited;
- «Olimp tradin» house;
- Cheriton Finance Limited;
- «Zavod obrabotki tsvetnykh metallov» JSC;
- «Ulbinsky metallurgicheskiy zavod» JSC
- «UnitedMetalsTradingLimited company» JSC
- «Kaztsink» LLP;
- «Kazenergokabel» JSC;
- «KVANZA» LLC.
7. Refined copper and untreated copper alloys; alloys on the basis of copper
Sale of refined copper and untreated copper alloys alloys on the basis of copper in the market of Kazakhstan in 2014 made 39203,3 tons, or 93,0% in comparison with 2010. In the domestic market this production in 2014 is consumed in the amount of 13,1% of market capacity, in the foreign market – 86,9%.
Table 12. Sale of Refined copper and untreated copper alloys; alloys on the basis of copper
|
2010 |
Share, % |
2014 |
Share, % |
2014/2010, % |
Sale in the Republic of Kazakhstan |
46 459,5 |
14,2 |
39 203,3 |
13,1 |
84,4 |
Foreign sales |
279 809,8 |
85,8 |
260 118,0 |
86,9 |
93,0 |
Source: Committee on Statistics of the Ministry of National Economics of the Republic of Kazakhstan.
Thus, the foreign market will remain the main potential market of refined copper and copper alloys.
According to preliminary data of International Copper Study Group (ICSG) "the world market of copper in May, 2015 has fixed deficit following the results of the second month in a row. Nevertheless, lack of metal was reduced to 62 thousand tons in comparison with 94 thousand tons in April, 2015 Output of refined copper in May, 2015 made 1,915 million tons while consumption made 1,977 million tons. In April, 2015, according to specified data, these indicators made respectively 1,83 million tons and 1,924 million tons.
In January-May, 2015 oversupply of metal in the world made about 4 thousand tons in comparison with deficit in 537 thousand tons in the similar period of time in 2014.
Refined copper production in 2015 made 2,9% and reached 9,264 million tons in comparison with 9,003 million tons in January-May, 2014. China acted like the main growth driver (for 5%), the second and the first places took Philippines and Indonesia. Democratic Republic of Congo increased release of metal for 12%. At the same time in Chile and Japan which take the second and third places in world copper production the indicator was reduced approximately by 3%, and in the USA - by 6%.
Demand for copper in the world in January-May, 2015 made 9,26 million tons against 9,54 million tons in 2014 (decrease by 2,9%). First of all, it was caused by reduction of indicator in China for 3%. Without notice of People's Republic of China consumption of metal reduced approximately by 3%, generally because of reduction of indicator in Russia by 45%. In Japan consumption reduced by 8%, in the European Union - by 6%.
Average price of copper in London metal exchange (LME) in July, 2015 reduced to 5456,91 US dollars per ton in comparison with 5833,61 US dollars per ton a month earlier. Average cost of metal since the beginning of 2015 makes 5854,91 US dollars per ton that is 15% lower than average value for the last year (6862 US dollars per ton)»[5]
Thus, it is necessary to expand operating markets of refined copper and copper alloys in the following production:
1) Cathodes and sections of cathodes made of refined untreated copper: it is offered to expand the markets in China up to 180 thousand tons (in 2014 the were delivered 173517,9 tons in the amount of 1136198,5 thousand US dollars); in Great Britain – up to 10 thousand tons (in 2014 there were delivered 9,9 thousand tons in the amount of 67807,4 thousand US dollars); in Turkey - up to 1200 tons (in 2014 there were delivered 1004,7 tons in the amount of 6463,0 thousand US dollars); in Germany - up to 200 tons (in 2014 there were delivered 140,0 tons in the amount of 924,0 thousand US dollars); in Egypt - up to 400 tons (in 2014 there were delivered up to 326,1 tons on 2199,7 thousand US dollars); in Italy - up to 550 tons (in 2014 there were delivered 438,8 tons in the amount of 2951,0 thousand US dollars); in Lithuania - up to 300 tons (in 2014 there were delivered 280,0 tons in the amount of 1966,0 thousand US dollars); in the Netherlands – up to 200 tons (in 2014 there were delivered 118,2 tons in the amount of 805,2 thousand US dollars);
2) Refined intreated copper: it is necessary to expand the operating markets in the largest market in Turkey up to 60 thousand tons (in 2014 there were delivered 53839,4 tons in the amount of 363661,6 thousand US dollars), and also in Germany - up to 100 tons (in 2014 there were delivered 62,1 tons in the amount of 398,7 thousand US dollars); in Lithuania - up to 260,0 tons (in 2014 there were delivered 248,6 tons in the amount of 1605,9 thousand US dollars);
3) Untreated alloys on the basis of copper and tin (bronze): it is necessary to expand the operating market in Germany up to 2100 tons (in 2014 there were delivered 2034,0 tons in the amount of 13102,4 thousand US dollars);
4) Untreated Copper alloys (except alloys with item 7405): it is necessary to expand the operating markets in India up to 100 tons (in 2014 there were 84,9 tons in the amount of 512,3 thousand US dollars); in Cyprus - up to 50 tons (in 2014 there were delivered 43,7 tons in the amount of 63,5 thousand US dollars); in China - up to 60 tons (in 2014 there were delivered 53,0 tons in the amount of 1020,3 thousand US dollars).
Besides, Estonia, Latvia and Cyprus which are included into the main countries-buyers of refined copper and alloys in the world can become the potential markets.
Considering the current situation in the world market of refined copper and untreated copper alloys, barriers in sale of Kazakhstani production in the markets of Great Britain, Turkey, Germany, Egypt, Italy, Lithuania, the Netherlands, India will not arise as these countries for a long period of time are considered the main consumers of this production.
At the same time, one of the main consumers of products of Kazakhmys Corporation LLP is People's Republic of China. Import duty established in 2014 by the Government of People's Republic of China on import of Kazakhstani copper rod makes 4% and it is essential barrier for its export.
2. The number of enterprises (participants) in the market.
As on January 1, 2015 in metal ore production 79 large and medium enterprises (apart from small enterprises), including 10 enterprises in iron ore production; 69 enterprises in production of ores of non-ferrous metals.
The number of participants in regions of Kazakhstan had the following indicators:
- in production and enrichment of iron ores (CCEA 271) there are 2 operating enterprises in Karaganda region, and also 1 operating enterprise in Zhambyl, Aktobe, Kostanay, Akmola regions and Astana;
- in production and beneficiation of nonferrous metal ores (OKED 072)there are 16 entities in Almaty city, in Karaganda-16, in East – Kazakhstan-7, in Akmola - 6, in Aktobe-5, in Astana-5, in Pavlodar - 4, in Kostanay - 4, in Zhambyl - 2, in South-Kazakhstan-2 and in North Kazakhstan regions -1;
In October, 2014 «Kazakhmys Corporation» LLP changed the name of public company on KAZ Minerals PLC. Fully integrated company which activities cover all stages from production of ore to production of commodity metals. The core business of the company is production and implementation of copper. The copper mining division also performs production of large volumes of other metals as coproducts, such as zinc, silver and gold;
«Kaztsink» LLP is large integrated producer of zinc with a high share of production of copper, precious metals and lead.
«Aluminiy Kazakhstana» JSC is the second largest producer of alumina. the Enterprise consists of Pavlodar Alumina Plant, Torgay and Krasnooktyabrsk bauxite mine administrations, calcareous mine Kegertas and Pavlodar combined heat and power plant.
Production output - alumina, gallium metal, sulfate aluminum.
«Kazakhstanskiy Electrolyzniy Zavod» JSC - Kazakhstan's first electrolysis plant on aluminum production. The construction of plant begun in December, 2007, in the second quarter of 2008 the plant reached planned capacity of the first stage in the amount of 125 000 tons per year. In May, 2010 the second stage of production in case of which the plant reached full capacity in 250 000 tons per year.
Ust-Kamenogorskiy Titano-magniyeviy kombinat JSC is one of the world's largest producers of spongy titanium, magnesium in the form of bullions and powders, vanadium pentoxide.
«Altynalmas» JSC - producer of gold, subsurface management in some gold fields of Kazakhstan. These are fields of Akbakay district in Zhambyl region, and also fields Pustynnoe and Karyerniy area in Karaganda region.
«Kazakhaltyn» MMC JSC is one of the oldest enterprises of gold industry of Kazakhstan. Developed Aksu, Bestobe and Zholymbet fields, Southern Karaultyube and Kyzylsorskoye in Northern Kazakhstan and also prepared for development of the field in East Kazakhstan – Akzhal and Kaskabulakskoye belong to assets of KazakhGold group.
Varvarinskoye JSC («Polymetal» JSC) purchased Varvarinskkoye field in 2009. In the field there operates modern gold-extracting and concentrating factory with capacity of 4,2 million tons of ore per year. Finished goods for Varvarinskoye JSC is float concentrate and auriferous alloy. Polymetal International Plc company is the unique shareholder of the largest producer of primary silver in Polymetal JSC in Russia.
Market capacity with the current number of participants in the market of production of non-ferrous metallurgy.
1. Untreated and half-treated silver of silver in powder form (CPA 244110 with 3 names under code FEACN 710610, 710691, 710692)
Market capacity of untreated and half-treated silver or silver in powder form in Kazakhstan in 2014 was reduced by 1,5 times in comparison with 2010 at the expense of stocks of this production in warehouses of the entities, considerable amounts of its export. This production is made in the Republic of Kazakhstan in the amount of 95,5% of market capacity, 0,2% are imported.
The main domestic participants in the market of Kazakhstan are:
- Aktogay BRANCH of Altynalmas JSC;
- Scharyk Mining Company LLP;
- Taskara LLP;
- Maykainzoloto JSC;
- Tau-Ken Altyn LLP;
- Sega Kz LLP;
- Ak Altynalmas JSC;
- Kaztsink LLP;
- Kazakhmys Smelting (Kazakhmys Smelting) LLP;
In the market of affined silver the main participants are:
- Tau-Ken Altyn LLP;
- Kaztsink LLP;
- Kazakhmys Smelting (Kazakhmys Smelting) LLP.
In the domestic market these products are not sold.
The main foreign participants in the market of Kazakhstan are: Germany and Turkey.
Table 13. A share of participants in the market of untreated and half-treated silver or silver in powder form
|
2014 |
|
tons |
Market share, % |
|
Production |
989,2 |
|
Export |
1036,2 |
|
Share of participants of the Republic of Kazakhstan |
0,00 |
0 |
Share of foreign participants |
310 951,30 |
100,00 |
Germany |
225 151,30 |
72,41 |
Turkey |
82000 |
26,37 |
USA |
300,00 |
0,10 |
France |
1500 |
0,48 |
Great Britain |
2 000,00 |
0,64 |
Capacity |
00,0 |
100,00 |
Source: based on data of Committee on Statistics of the Ministry of National Economics of the Republic of Kazakhstan, Customs Control Committee of the Ministry of Finance of the Republic of Kazakhstan
2. Untreated and half-treated Gold or gold in powder form (production of CPA 244120 with 4 names under code FEACN 710811, 710812, 710813, 710820.
Market capacity of untreated of half-treated gold or gold in powder form in Kazakhstan in 2014 made 110,8 tons, or 188,3% in comparison with 2010. This production is made in the Republic of Kazakhstan in the amount of 42,3% of market capacity, 57,7% of products are imported because. In the domestic market this production is consumed in the amount of 93,0% of the capacity of this market.
Table 14. The main domestic participants in the market of untreated or half-treated gold and gold in powder form
1 |
JV Saga Krik Gold Company LLP |
15 |
Artel Starateley Gornyak LLP |
2 |
Brendt LLP |
16 |
Varvarinskoye JSC |
3 |
Stepnyakskoye Proizvodstvo JV Saga Krik Goldkompani LLP |
17 |
JSCMaykainzoloto |
4 |
Grk Tokhtar LLP |
18 |
Dank LLP |
5 |
Altay Ken-Bayytu LLP |
|
Zherek LLP |
6 |
BRANCH of Aksu Mine of Mining and Metallurgical Concern Kazakhaltyn JSC |
20 |
Financial and Investment Corporation Alel JSC |
7 |
BRANCH of Mining and Metallurgical Concern Kazakhaltyn JSC |
21 |
JSC Kazakhaltyn MMC BRANCH - Bestobe's Mine JSC |
8 |
Tort Kuduk Mining and Processing Works JSC |
22 |
Tau-Ken Altyn LLP |
9 |
Aktogay BRANCH of Ak Altynalmas JSC |
23 |
Sega Kz LLP |
10 |
Orion Minerals LLP |
24 |
Altynalmas JSC |
11 |
BRANCH of Orion Minerals LLP |
25 |
Kaztsink LLP |
12 |
Scharyk Mining Company LLP |
26 |
Raygorodok LLP |
13 |
Kazakhmys Smelting (Kazakhmys Smelting) LLP |
27 |
Stepnogorsky Mining and Chemical Combine LLP |
14 |
Taskara LLP |
28 |
Palm-Es LLP |
Source: Committee on Statistics of the Ministry of National Economics of the Republic of Kazakhstan.
In the market of affined gold the main participants are:
- Tau-Ken Altyn LLP;
- Kaztsink LLP;
- Kazakhmys Smelting (Kazakhmys Smelting) LLP.
Among foreign participants the main participant is Germany.
Table 15. The share in the market of untreated and half-treated gold and gold in powder form
|
2014 |
|
tons |
Market share, % |
|
Production |
50,3 |
|
Export |
8,3 |
|
Share of participants of the Republic of Kazakhstan |
42,00 |
37,91 |
Tau-Ken Altyn LLP |
0,20 |
5,00 |
Kaztsink LLP |
21 |
21,39 |
Kazakhmys Smelting (Kazakhmys Smelting) LLP |
1,80 |
6,80 |
JV Saga Krik Gold Company LLP |
0,08 |
0,20 |
Kazminerals LLP |
0,55 |
1,30 |
Grk Tokhtar LLP |
0,00 |
|
Yubileynoye LLP |
0,25 |
0,60 |
BRANCH of Mining and Metallurgical Concern Kazakhaltyn JSC |
0,02 |
0,05 |
BRANCH of Aksu Mine of Mining and Metallurgical Concern Kazakhaltyn JSC |
0,04 |
0,10 |
BRANCH of Kazakhaltyn MMC JSC - Bestobe Mine |
0,04 |
0,10 |
Tort Kuduk Mining and Processing Works JSC |
0,00 |
0,01 |
Aktogay BRANCH of Ak Altynalmas JSC |
0,08 |
0,20 |
Orion Minerals LLP |
0,00 |
0,01 |
Scharyk Mining Company LLP |
0,00 |
0,00 |
Financial and Investment Corporation Alel JSC |
0,27 |
0,65 |
Taskara LLP |
0,00 |
0,01 |
Artel Starateley Gornyak LLP |
0,00 |
0,01 |
Varvarinskoye JSC |
0,29 |
0,70 |
Maykainzoloto JSC |
0,08 |
0,20 |
Dank LLP |
0,00 |
0,01 |
Zherek LLP |
0,08 |
0,02 |
Altay Ken-Bayytu LLP |
0,02 |
0,04 |
Altynalmas JSC |
0,17 |
0,40 |
Sega Kz LLP |
0,00 |
0,01 |
Palm ES LLP |
0,0 |
0,01 |
Share of foreign participants |
68,8 |
62,09 |
Germany |
11,70 |
21,55 |
Switzerland |
0,004 |
0,01 |
Japan |
0,04 |
0,07 |
France |
0,026 |
0,05 |
Great Britain |
0,03 |
0,06 |
Others |
0,23 |
0,42 |
Market capacity |
110,8 |
100,00 |
Source: based on data of Committee on Statistics of the Ministry of National Economics of the Republic of Kazakhstan, Customs Control Committee of the Ministry of Finance of the Republic of Kazakhstan
3. Untreated Aluminum (CPA 244211 with 2 names under codes FEACN 760110, 760120).
Market capacity of untreated aluminum in Kazakhstan in 2014 made 35961,2 tons, or 1334,9% in comparison with 2010. This production is made in the Republic of Kazakhstan of 98,9% of market capacity, 1,1% are exported. In the domestic market this production is consumed in the amount of 17,0% of the capacity of this market.
The main domestic participants in this market are:
- Kazakhstan Electrolysis Plant JSC;
- Aluminiy Kazakhstana JSC;
- Kaztsink LLP;
- Profil Metals Ltd LLP (Metals Ltd.);
The main foreign participants are: Austria, Germany, Turkey.
Table 16. The share in the mrket of untreated aluminium
Name |
2014 |
|
tons |
market share, % |
|
Production of the Republic of Kazakhstan |
209 252,0 |
|
Export |
175723,3 |
|
Share of participants of the Reublic of Kazakhstan |
33 528,7 |
93,24 |
Kazakhstan Electrolysis Plant JSC |
33293,9 |
92,5 |
Profil Metals Ltd LLP (Metals Ltd.) |
235,0 |
0,74 |
Share of foreign participants |
2432,5 |
6,76 |
Germany |
180,1 |
0,50 |
Avstir |
1,6 |
0,00 |
Turkey |
0,5 |
0,00 |
China |
4 |
0,01 |
Russia |
2246,3 |
6,25 |
Market capacity |
35 961,2 |
100 |
Source: based on data of Committee on Statistics of the Ministry of National Economics of the Republic of Kazakhstan, Customs Control Committee of the Ministry of Finance of the Republic of Kazakhstan
4. Untreated lead (CPA 244311 with 3 names under codes FEACN 780110, 780191, 780199).
Market capacity of lead raw in Kazakhstan in 2014 made 18090,9 tons, or 152,8% in comparison with 2010. This production in the Republic of Kazakhstan is made in the amount of 99,6% of market capacity, 0,4% of products are imported. In the domestic market production is consumed in the amount of 14,2% of market capacity. Market capacity of untreated lead is presented in Tab. 91.
The main domestic participants in this market are Kaztsink LLP (Ust-Kamenogorsk) and Yuzhpolimetall PC JSC. The main foreign participants in the market of Kazakhstan - Russia, Australia, China, Korea.
Table 17. The share of participants in the market of untreated lead
Name |
2014 |
|
tons |
Market share, % |
|
Production of the Republic of Kazakhstan |
127 064,0 |
|
Export |
109425 |
|
Share of participants of the Repuvlic of Kazakhstan |
17 639,0 |
97,50 |
Kaztsink LLP (Ust-Kamenogorsk) |
17639 |
97,50 |
Yuzhpolimetall PC JSC |
Stooped due to the problems with ecology |
|
Share of foreign participants |
451,9 |
2,50 |
China |
60 |
0,33 |
Australia |
96,9 |
0,54 |
Korea |
4,6 |
0,03 |
Russia |
290,4 |
1,61 |
Market capacity |
18 090,9 |
100,00 |
Source: based on data of Committee on Statistics of the Ministry of National Economics of the Republic of Kazakhstan, Customs Control Committee of the Ministry of Finance of the Republic of Kazakhstan
5. Untreated Zinc (CPA 244312 with 3 names under codes FEACN 790111, 790112, 790120).
Market capacity of untreated zinc in Kazakhstan in 2014 made 43865 tons, or 102,38% in comparison with 2010. This production in the Republic of Kazakhstan is made in the amount of 99,6% of market capacity, 0,4% of products are imported. In the domestic market production is consumed of 13,5% of market capacity.
The main domestic participants in this market are Kaztsink JSC (Ust-Kamenogorsk and Ridder) and Balkhash zinc plant Kazakhmys Corporation LLP. The main foreign participants in the market of Kazakhstan are: Lithuania, Italy, Belgium.
Table 18. The share of participants in the market of untreated zinc
Name |
2014 |
|
tons |
Market share, % |
|
Production of the Republic of Kazakhstan |
324 946,00 |
|
Export |
282 263,00 |
|
Share of participants of the Republic of Kazakhstan |
42 683,0 |
97,31 |
Kaztsink JSC (Ust-Kamenogorsk and Ridder) |
40036,7 |
93,7 |
Balkhash zinc plant Kazakhmys Corporation LLP. |
2646,3 |
3,6 |
Share of foreign participants |
1 182,00 |
2,69 |
Italy |
0,7 |
0,00 |
Russia |
1 181,3 |
2,69 |
Market capacity |
43 865,0 |
100,00 |
Source: based on data of Committee on Statistics of the Ministry of National Economics of the Republic of Kazakhstan, Customs Control Committee of the Ministry of Finance of the Republic of Kazakhstan
6. Untreated tin (CPA 244313, with 2 names under codes FEACN 800110, 800120).
Market capacity of utreated tin in Kazakhstan in 2014 made 632,5 tons, or 60,9% in comparison with 2010. Production in the Republic of Kazakhstan is made in the amount of 6,3% of market capacity, 93,7% of products are imported. In the domestic market this production is consumed of 97,0% of market capacity.
The main and unique domestic participant in this market is Syrymbet JSC. The main foreign participants - Indonesia, China, France, Russia.
Table 19. The share of participants in the market of untreated tin
Name |
2014 |
|
tons |
Market share, % |
|
Production of the Republic of Kazakhstan |
41,00 |
|
Export |
19,9 |
|
Share of participants of the Republic of Kazakhstan |
21,1 |
3,34 |
Syrymbet JSC |
21,1 |
3,34 |
Share of foreign participants |
611,4 |
96,66 |
Indonesia |
240,2 |
37,98 |
China |
190,7 |
30,15 |
France |
0,3 |
0,05 |
Russia |
180,1 |
28,47 |
UAE |
0,1 |
0,02 |
Market capacity |
632,5 |
100,00 |
Source: based on data of Committee on Statistics of the Ministry of National Economics of the Republic of Kazakhstan, Customs Control Committee of the Ministry of Finance of the Republic of Kazakhstan
7. Unrefined copper (including blister copper); anode copper for refinement of electrolytic anode, except cladding copper, anodes for application of electrolytic coating (CPA 244412, with 1 name under code FEACN 740200).
Market capacity of unrefined copper (including blister copper); copper anodes for electrolytic refinement, except cladding copper, anodes for application of electrolytic coating in Kazakhstan in 2014 made 214826,9 tons, or 68,6% in comparison with 2010. This production in the Republic of Kazakhstan is made in the amount of 100% of market capacity, 0% of products are imported. In the domestic market this production is consumed in the amount of 100% of market capacity.
The main domestic participants in this market are Kazakhmys Corporation LLP, Kaztsink JSC and Kazminerals LLP. From foreign participants it is only Russia with insignificant export volume to Kazakhstan.
Table 20. Share of participants in the market of unrefined copper
Name |
2014 |
|
tons |
Market share, % |
|
Production of the Republic of Kazakhstan |
214 830,00 |
|
Export |
4 |
|
Share of participants of the republic of Kazakhstan |
214 826,0 |
100,00 |
Kazakhmys Corporation LLP |
155321 |
72,3 |
Kaztsink LLP |
42105 |
19,6 |
Kazminerals LLP |
17400 |
8,1 |
Share of foreign participants |
0,9 |
0,00 |
Russia |
0,9 |
0,0 |
Market capacity |
214 826,9 |
100,00 |
Source: based on data of Committee on Statistics of the Ministry of National Economics of the Republic of Kazakhstan, Customs Control Committee of the Ministry of Finance of the Republic of Kazakhstan
8. Refined copper and copper alloys; alloys on the basis of copper (CPA 244413, with 8 name under code FEACN 740311, 740312, 740313, 740319, 740321, 740322, 740329, 740500).
Market capacity of refined copper and untreated copper alloys; alloys on the basis of copper in Kazakhstan in 2014 made 39203,3 tons, or 93,0% in comparison with 2010. This production in the Republic of Kazakhstan is made in the amount of 99,7% of market capacity, 0,3% of products are imported. In the domestic market this production is consumed of 13,1% of market capacity.
The main domestic participants in the domestic market of Kazakhstan are Kazakhmys Corporation LLP and Kaztsink LLP. The main foreign participants - Russia, Germany, France.
Table 21. The share of participants in the parket of refined copper and untreated coppr alloys; alloys on the basis of copper
Name |
2014 |
|
tons |
Market share, % |
|
Production of the Republic of Kazakhstan |
298 323,00 |
|
Export |
260 118,00 |
|
Share of participants of of the Republic of Kazakhstan |
38 205,0 |
97,45 |
Kazakhmys Corporation LLP |
22 923,00 |
58,47 |
Kaztsink JSC |
15 282,00 |
38,98 |
Share of foreign participants |
998,2 |
2,55 |
Germany |
2,5 |
0,01 |
France |
1,0 |
0,00 |
Brazil |
0,1 |
0,00 |
China |
0,0 |
0,0 |
Russia |
994,6 |
2,54 |
Market capacity |
39 203,2 |
100,00 |
Source: based on data of Committee on Statistics of the Ministry of National Economics of the Republic of Kazakhstan, Customs Control Committee of the Ministry of Finance of the Republic of Kazakhstan
As of August 1, 2015 in GMP of Kazakhstan 166 entities with foreign capital, including 8 entities on production of iron ore, 85 in extraction of non-ferrous metal ores, 42 - in steel industry; 23 – in production of main precious and non-ferrous metals and 8 – in metal casting.
Table 22. Quantity of operating enterprises with foreign capital as of August 01, 2015, in units
|
Total |
Joint ventures with (with foreign ownership) |
Foreign |
Iron ore mining (071) |
8 |
4 |
4 |
Extraction of non-ferrous metal ores (072) |
85 |
43 |
42 |
Source: Committee on Statistics of the Ministry of National Economics of the Republic of Kazakhstan.
3. Barriers and limitations
Technical barriers.
"The list of technical barriers includes REACH System and "scientifically unreasonable classification of nickel salts" in EU, and obligatory certification of some types of steel products in India.
According to regulations of EU No. 1907/2006 which came into force on June 1, 2007 there was introduced technical barrier in relation to chemicals - REACH systems (Registration, Assessment and Authorization of Chemicals). The purpose of regulations is increase of level of health care, environment protection, using harmless substitutes instead of potentially hazardous chemical substance, and increase of competitiveness of European industry, mostly chemical one.
These regulations oblige EU producers to register in European chemical agency all chemicals (both made in EU, and imported) in the territory of EU in the amount of more than one ton per year. It limits import of a row of goods, mainly chemical, petrochemical and metallurgical.
Barriers in EBD market
According to Center of integration researches of Eurasian Development Bank (further - CIR EDB) "trade within Euroasian union is not so successfull. Non-tariff barriers increase business costs for 15–30% of the cost of the goods made in the countries – partners in Euroasian union. The report is prepared at the end of 2014 on the basis of poll of 530 Russian, Kazakhstan and Belarusian export entities[6].
Within preparation of report such non-tariff barriers as sanitary and phytosanitary restrictions, quotas, subsidies to domestic producers were under research. And also measures influencing the competition: restriction of access of the foreign companies to state procurements and institute of special importers allocated with exclusive right for import of goods in domestic industry
As the main barriers of access to the market of Russia and Kazakhstan the companies of Belarus marked out lack of VAT return for fuel, limited insurance coverage (to 3 thousand euros) in Russia according to "green" card, operational restrictions, a large number of penalties and checks.
In case of implementation of transportations from the third countries to Russia and Kazakhstan respondents referred to the main restrictions the number of issued permissions, the principle of residence in case of customs clearance of goods.
Kazakhstan respondents have noted a large number of checks and penalties of transport inspection and state traffic inspectorate in case of implementation of a cargo transportation to Russia. At the same time all interrogated Kazakhstan companies specified lack of barriers and restrictions for international cargo transportation in Belarus.
Partner countries inside EAEU agreed about non-use of measures of non-tariff regulation on May 29, 2014. And tariff barriers are formally removed in 2011.
In conditions of economic crisis EAEU authorities will have to increase non-tariff barriers. Western Sanctions and Russian embargo in response also force Russia to protect interests of domestic producer as it is impossible to develop import substitution in public market even if partners are in common customs territory.
Preservation of barriers is promoted by huge difference in tax rates, by distinctions in laws and procedures regulating business activity and competition, a difference in currency rates and a rate of inflation and also lack of general currency of the Union. Euroasian union will be able to perform in full not earlier than in 2025, according to EAEU founders agreement".
Industry barriers of an entrance on the market of Russia
Non-ferrous metallurgy of Russia is one of industries of specialization of Russia in modern international job specialization. Russia takes the 2nd place in the world on production of aluminum and nickel (after China), the 1st place - export of these metals, the 2nd place in the world - in production (shipments) of titanic products.
Competitive advantage of Russian non-ferrous metallurgy is developed source of raw materials on the main non-ferrous metals (nickel, copper, zinc, metals of platinum group) allowing to minimize risks on deliveries of raw materials.
Production of aluminum, copper, nickel, titan and precious metals is characterized by rather high level of investments.
At the majority of the entities there are adopted and implemented investing programs of development for middle-term and long-term period.
In recent years the entities of non-ferrous metallurgy have implemented a number of innovative technologies.
In a metal industry of Russia there is rather high scientific and technical potential, it is provided more than 50 by scientific and technical and project organizations with total number more than 10 thousand people. Three scientific organizations have the status of state scientific centers (SSC) and perform functions of leading organizations in the most important directions of development of science, technologies and equipment. Also certain contribution to development of technologies of production and enrichment of ores, productions of non-ferrous metals bring the academic and high school sciences.
4. List of potential opportunities for entrepreneurial initiatives. Structure of chain of added value.
The existing gaps in chain of added value of production of non-ferrous metallurgy
The assessment of repartitions in non-ferrous metallurgy of Kazakhstan which is carried out on the basis of provided information of Committee on the Statistics of the Ministry of Economy of the Republic of Kazakhstan "Resources and Use of Separate Types of Production (Goods) and Raw Materials in the Republic of Kazakhstan" on a wide range of production of MMC shown that on its initial repartitions (production of metals) high degree of satisfaction of industries of national economy in this production is also observed. However at a production phase of different types of metal rolling problems of incomplete range of made and necessary production are observed.
So, on production of non-ferrous metallurgy which belongs to repartitions "Metal production" high security of Kazakhstan on a bigger range of this production is observed:
- Untreated silver and half-treated silver and silver in powder form (FEACN 244110), the level of security of the domestic market of Kazakhstan-95,5%;
- Untreated Aluminum (FEACN 244211) - 98,9%
- Untreated Lead (FEACN 244311) - 99,6%;
- Untreated Zinc (FEACN 244312) - 99,6%;
- Unrefined copper (including blister copper); anode copper for refinement of electrolytic anode, except cladding copper, anodes for application of electrolytic coating (FEACN 244412) - 100%.
- Unrefined copper and untreated copper alloys; alloys on the basis of copper (FEACN 244413), the level of security of Kazakhstan – 99,7%;
However, on gold and tin the level of security of Kazakhstan is characterized by the following indicators:
1) Untreated Gold raw and half-treated gold or gold in powder form (FEACN 244120) - 42,3%.
2) Untreated tin (FEACN - 244313) - 6,3%. In this group dependence 100% is observed on the following production:
- not alloyed untreated tin (FEACN 800110), in 2014 there were imported 431,0 tons in the amount of 9631,3 thousand US dollars;
- untreated tin alloys (FEACN 800120), in 2014 there were imported 0,3 tons in the amount of 1,2 thousand US dollars.
Table 23. Existing gaps (gaps) in the chain of added value in the production of non-ferrous metals
1 этап |
2 этап |
3 этап |
4 этап |
|||||
Ore production |
Benification/ flotation |
Casting |
Refinement |
|||||
Lead ore |
Lead concentrate |
Untreated Silver and half-treated silver and silver in powder form (FEACN 244110) |
Refined silver |
|||||
Gold ore |
Gold concentrate |
Untreated Gold and half-treated gold and gold in powder form (FEACN 244120) |
(FEACN 244120) |
|||||
Aluminum ore |
Aluminum concentrate |
Aluminum raw (FEACN 244211) |
Refined gold (FEACN 244120) |
|||||
Lead ore |
Lead concentrate |
Lead raw (FEACN 244311) |
Refined lead |
|||||
Zinc ore |
Zinc concentrate |
Zinc raw (FEACN 244312) |
Refined Zinc |
|||||
Copper ore |
Copper concentrate |
Unrefined copper (including blister copper); anode copper for refinement of electrolytic anode, except cladding copper, anodes for application of electrolytic coating (FEACN 244412) |
Refined copper and untreated copper alloys; alloys on the basis of copper (FEACN 244413) |
|||||
Tin ore |
Tin concentrate |
Tin raw (FEACN 244313) |
Refined tin |
|||||
Untreated not alloyed tin (FEACN 800110) |
||||||||
Untreated tin Alloys (FEACN 800120) |
||||||||
|
|
Gap in the chain of added value, products are not manufactured, 100% dependence of the Republic of Kazakhstan |
|
Product are manufactured , low dependence of the Republic of Kazakhtan |
|
|||
Source: Association of Mining and Metallurgical Enterprises
Table 24. List of potential opportunities for entrepreneurial initiatives
Name of products |
Approximate capacity of market |
|
tons |
Thousand US dolars |
|
Untreated Tin (CPA 244313) |
|
|
Untreated not alloyed Tin (FEACN 800110) |
431,0 |
9631,3 |
Untreated Gold and half-treated gold in powder form (CPA 24412) |
|
|
Gold in other half treated forms - bars, wires and profiles; plates, sheets and strips thickness more than 0,15mm, except any basis (FEACN 71081310). |
369,3 |
23,2 |
Source: Association of Mining and Metallurgical Enterprises
The reasons of the existing gaps in chain of added value of production of MMC
The following basic reasons of existing gaps in the chain of added value of MMC production are:
1) Lack of reasonable state program on development of chain of added value in MMC of the Republic of Kazakhstan within the first State program industrial and innovative development of the Republic of Kazakhstan for 2010-2014 (SPIID);
2) Lack of experience in identification of gaps of the chain of added value that not allowed to include certain measures for their development within the first SPIID;
3) The priority directions in development of the chain of added value as however and in other industries of processing industry of Kazakhstan, were determined not by means of scientifically proved economic methods, and intuitively not allowed to develop necessary chains of added value within the first SPIID which are really in increased demand in industries of national economy of Kazakhstan;
4) Development of SPIID was performed before acceptance of regulatory legal acts, regulatory questions of state support of industrial and innovative activities (the Law of the Republic of Kazakhstan "On State Support of Industrial and Innovative Activities"; comprehensive programs of support of entities "Performance of 2020", Wellness Program, "Road Map of Business of 2020"), that not allowed to stimulate developments of the chains of added value by small and medium-sized enterprises;
5) Within the Card of industrialization on 2010 - 2014 in the sphere of MMC there is a trend toward raw materials in implemented investment projects. From total quantity of entered projects on projects on production with a high added value only 14 projects are the share of total amount of 54493 million tenge, or 8,6% of the total amount of financing of implemented projects in MMC. The similar trend is observed within the second Card of industrialization on 2015 – 2019.
6) Unprofitableness for foreign investors to develop the chain of added value in Kazakhstan, especially in ferrous metallurgy of the country, owing to adverse conjuncture of the world market of production of MMC, receipt of bigger amount of profit on sale of ores of ferrous and non-ferrous metals, than from sales of products with a high added value.
5. Strengths of industry.
Mining and metallurgical industry treats the major industries which on an equal basis with an oil and gas industry and power determine economic, social and technology development of the Republic of Kazakhstan. Long-term forecasting, and also identification of innovative potential of technological directions, are priority tasks for successful development planning of this industry.
The mining and metallurgical industry of Kazakhstan possesses a number of favorable conditions for successful development of an industry in the long term from which it is possible to distinguish the following:
- a transport geographical position of the entities and access to the world markets (the proximity of the republic to Southeast Asia and Russia, the large export entities also have branched access to the markets of EU and the USA);
- availability of energy resources and own source of raw materials provided by ores of ferrous and non-ferrous metals, the coked coals, rare, rare-earth, radioactive and precious metals;
- availability of strong production base and the developed infrastructure of the entities with the specialized research centers (factory laboratories);
- external investment appeal of an industry;
- the existing raw orientation of economy in the absence of any repartitions.
Table 25. Strengths of regulation and state control:
- - availability of rather complete national legal system in various spheres; - availability of the approved fundamental strategic and program documents; - availability of various measures of the state support of subjects of business in MMC; - availability of the necessary legislation and infrastructure for development of internal conversion and production with a high value added in metallurgy. |
Source: Association of Mining and Metallurgical Enterprises
Table 26. Strengths of prospecting works, production and enrichment of ores
- a strategic role of the mining industry in providing amount of GDP; - availability of knowledge and technologies in the field of geology, geophysics, geochemistry and mining; - the republic takes leading positions on inventories of manganese and chrome ores, occupies the 1nd place on uranium production; - availability of necessary human resources; - availability of staticized cartographical information with forecast resources of minerals; - application of environmentally friendly, safe technologies of production and technologies of complete extraction of all components. |
[1] Source: http://goldenfront.ru/articles/view/pervaya-serebryanaya-10-ka-mestorozhdeniya-zolotodobytchiki-stra...
[2] Source: www.kt.kz/rus/economy/na_mirovom_rinke_birzhevie_kotirovki_aljuminija_izmenjajutsja_raznonapravlenno...
[3] Source www.kt.kz/rus/economy/na_mirovom_rinke_svinca_za_poslednie_dva_mesjaca_proizoshlo_ponizhenie_cen_obzor__1153610929.html.
[4] http://www.indkaz.kz/articles/na-mirovom-rynke-cinka-proizoshlo-ponizhenie-birzhevyh-kotirovok-obzor...
[5] Source: http://www.finmarket.ru/database/news/4090641
[6] Source:www.eabr.org/r/research/analytics/centre/projects/integration_barometer/.
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