The mineral industry of Kazakhstan is one of the most competitive and fastest growing sectors of the country. Kazakhstan ranks second only to Russia among the countries of the CIS in its quantity of mineral production. It is endowed with large reserves of a wide range of metallic ores, industrial minerals, and fuels, and its metallurgical sector is a major producer of a large number of metals from domestic and imported raw materials. In 2005, its metal mining sector produced bauxite, chromite, copper, iron, lead, manganese, and zinc ores, and its metallurgical sector produced such metals as beryllium, bismuth, cadmium, copper, ferroalloys, lead, magnesium, rhenium, steel, titanium, and zinc. The country produced significant amounts of other nonferrous and industrial mineral products, such as alumina, arsenic, barite, gold, molybdenum, phosphate rock, and tungsten. The country was a large producer of mineral fuels, including coal, natural gas, oil, and uranium. The country’s economy is heavily dependent on the production of minerals. Output from Kazakhstan’s mineral and natural resources sector for 2004 accounted for 74.1% of the value of industrial production, of which 43.1% came from the oil and gas condensate extraction. In 2004, the mineral extraction sector accounted for 32% of the GDP, employed 191,000 employees, and accounted for 33.1% of capital investment and 64.5% of direct foreign investment, of which 63.5% was in the oil sector. Kazakhstan's mining industry is estimated at US$29.5 billion by 2017.
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Environment
Kazakhstan faces a number of environmental challenges, including industrial pollution, land degradation and desertification, and contamination from its former role in nuclear weapons development and testing in the Semipalatinsk region. Significant improvements in the environmental situation of the northern Aral Sea area has been made owing to dam construction and river flow regulation.
Structure
Kazakhstani law holds that no sector of the economy is fully closed to investors, and, in 2005, a large number of Kazakhstan’s mineral production enterprises had significant foreign ownership. In 2005, the government also maintained ownership in a number of mineral production enterprises; the percentage of ownership varied depending on the enterprise. Despite being open to foreign investment and even listed on Western stock exchanges, the ownership structure of some major mineral producing enterprises was not entirely transparent.
Trade
In 2005, fuel and oil products comprised 69% of the value of exports. Ferrous and nonferrous metals were other significant export products. The value of commodity exports from the mineral extraction sectors increased considerably in 2005, owing to an increase in the price of oil and other mineral commodities.
Kazakhstan exports minerals to Russia, China, USA, Japan, Germany, Switzerland, Great Britain, Italy, Spain, Netherlands, South Korea, UAE.
Outlook
The large predicted oil resources of the Kazakhstan sector of the Caspian shelf will require a significant amount of investment to develop. The required cumulative investment could be as much as $160 billion, of which about $10 billion would be for the initial stage of exploration, including field appraisal. Western companies already have invested more than $7 billion. A constraint to obtaining investment funds to develop the Caspian shelf is the lack of resolution of the territorial status of the Caspian Sea in regards to the demarcation lines and the ownership rights of the bordering states. This issue may have been partially resolved, however, with the agreement between Kazakhstan and Russia to partition the seafloor of the Caspian along the midline between the two countries. Similar agreements have been concluded between Kazakhstan and Azerbaijan, and between Azerbaijan and Russia. Also, in the energy sector, Kieltyka will play an increasingly important role as one of the world’s main suppliers of uranium.
Although Kazakhstan has adequate lead and zinc reserves to allow it to expand production through the next decade, expansion will depend on Kazakhstan’s companies being able to acquire financing and the participation of foreign firms in developing large lead and zinc deposits.
Moreover, Kazakhstan is facing a critical depletion of its minerals. The fields discovered by Soviet geologists have been developed too intensely in the last decades, while geological exploration has not yet covered all the promising areas. Kazakhstan is facing inability to restock the depleted reserves and the tendency is worsening. The depletion of reserves of many of main minerals greatly exceeds the speed of their growth after exploration. Reserves increase in case of some metals (iron, manganese, gold, zinc) due mainly through re-evaluation and additional exploration of the already discovered fields. However, the existing registered reserves of recently discovered copper and gold fields have low quality and cannot be considered equivalent to the depleted reserves.