From the upcoming month, the issuance of licenses for metal detection shall solely be processed in an electronic format.
Commencing in October, applications for licenses to explore solid minerals can only be submitted online. Erlan Akbarov, the head of the geological committee, confirmed this development during discussions at the geologists’ congress on the industrial platforms in Astana, as reported by inbusiness.kz.
“The regulatory framework has already been signed for the electronic format, and licenses will be exclusively provided in electronic form from October 1,” affirmed the official in response to inquiries about the launch of a fully digital system for license applications.
Towards the end of August, the Department of Subsoil Use for Solid Minerals of the Ministry of Industry revealed its plans to introduce an electronic format for receiving documents related to the issuance of mineral exploration licenses. To facilitate this, the platform www.minerals.gov.kz was launched, tested, and prepared during the summer. Inbusiness.kz had previously reported on its intended launch in February, expressing concerns that its implementation might not be adequately executed, leaving bureaucratic loopholes that worried major investors. However, in this instance, the government successfully resisted corrupt temptations, which is commendable.
During the discussion, Akbarov also confirmed that the temporary transition from the system of calculating and accounting for reserves according to the standards of the State Commission on Reserves (GKZ) to the Kazakh version of the CRIRSCO family template (KAZRC) should be completed by the following year. This transition was initiated with the introduction of the Subsoil Code in 2018.
“In accordance with the Subsoil and Subsoil Use Code, the state commission on reserves will be abolished effective January 1, 2024,” the government official informed journalists.
By the way, in the diagnostic report on the mining sector in Kazakhstan published by the World Bank earlier this year, it was previously stated that the geological committee allegedly expressed doubts about meeting the 2024 deadline due to the risk of reducing the tax base. Currently, the mineral production tax is calculated based on the depletion of reserves accounted for by the GKZ system.
The adoption of international reporting standards for the certification of mineral reserves should not be delayed. Reporting on non-combustible mineral reserves, overseen by the United Committee for International Reporting Standards for Mineral Reserves and Resources (CRIRSCO), is based on international standards developed by Australia, Canada, and Chile. The new Subsoil Code stipulates that all such reporting should be prepared in accordance with CRIRSCO standards. However, until January 2024, new project reports were given a temporary period to prepare in accordance with CRIRSCO standards or the State Commission on Reserves (GKZ standards) under the Committee on Geology, which were inherited from the Soviet era. The transition to the internationally recognized CRIRSCO system for mineral reserve certification was introduced to standardize the description of mineral resources for both the private and public sectors. The Committee on Geology and tax authorities are still discussing a delay in this transition, which contradicts existing advanced international practices and delays much-needed updates to the tax regime in the mining sector, as reported in the study by the World Bank.
Large Reserves in Words
In a conversation with inbusiness.kz correspondent after the congress, Georgiy Freiman, the head of the Professional Association of Independent Mineral Experts (PONEN) in Kazakhstan, who has long advocated for the transition to new geological reporting standards, explained that there is currently no legislative obstacle to replacing GKZ.
“As of today, no amendments that would repeal this provision in the Subsoil and Subsoil Use Code have been made. According to the current Code, yes, there is a transition, but a very large package of amendments is being prepared, and we do not know what parliamentarians will ultimately decide when these amendments are finalized and in what form they will be included in the Code… These amendments should be adopted this year, by the end of the year,” the expert said in the dialogue.
In his opinion, making a large number of changes within five years of the Subsoil Code’s implementation is a normal process.
“There were improvements, there were shortcomings, there were some positions that were simply unclear, and the practice of its (Subsoil Code’s) application over five years shows that adjustments need to be made, some things are good, some not very, some bad – but this is an inevitable, normal process because the criterion of truth is practice. You can develop any Code you want, but when it starts to take effect, what was not considered, what was not right, what should be excluded, all of this is done for any Code, more or less frequently. But since it was quite radical compared to the Law on Subsoil and Subsoil Use, yes, many changes were made, so amendments are proposed every two years,” the specialist believes.
At the same time, he is confident that transitioning to international reporting standards from GKZ is beneficial for a sober understanding of the country’s extractable metal reserves.
“The problem is that the reliability of historical information often does not correspond to the requirements that ensure the quality of assessing the quantity of mineral resources. We always say that transitioning from the GKZ standard to the international KAZRC standard, as a representative of the CRIRSCO family, actually improves the quality and reliability of geological information about the object. We say that our state reserves balance, which exists for many objects even from the 50s and 60s, does not correspond to any modern requirements, and it is not objective. Different figures are often called from high platforms regarding what we have in terms of individual positions, saying that we have great potential. But this potential has been accumulated over decades of exploration and assessment according to Soviet standards. And if we re-evaluate it according to international standards now, it will generally be much smaller,” he emphasized.
“Ineffectual Department”
Olga Petrova, the leader of Rio Tinto Exploration Kazakhstan’s mineral utilization division, shared during the conference that the Anglo-Australian company Rio Tinto is currently engaged in 11 geological projects in the Kostanay, Karaganda, and Zhambyl regions of Kazakhstan. They are also exploring the potential for geological exploration in Eastern Kazakhstan, highlighting the promising prospects for the mining industry in Kazakhstan.
However, the corporation’s experts are encountering difficulties when submitting applications for exploration licenses and when communicating with relevant government agencies. For instance, it often takes weeks or even months to reach the personnel of the Ministry of Industry’s mineral utilization department.
“We are testing the electronic submission system (minerals.gov.kz). They have stated that it is a pilot project, so we do not anticipate it to function flawlessly. Nevertheless, it is disheartening that there is a lack of communication. Although there is technical support on the website, the system itself is not functioning properly. It does not fully align with the Mining Code. The deadlines specified in the Mining Code are not being met due to the system’s lack of smooth operation. Furthermore, there is almost no opportunity for clarification or to determine the appropriate point of contact. It takes a considerable amount of time to reach out to individuals regarding our inquiries or applications. When we file complaints with the Ministry of Industry, we receive responses from the individuals who are the subjects of our complaints, in other words, the executors. The communication aspect of the system is currently misconfigured,” lamented the representative of the foreign mining company.
During her presentation at the conference’s question-and-answer session, Olga Petrova directly addressed Vice Minister of Industry Iran Sharkan, who oversees mineral utilization, and requested special attention to be given to the communication between mineral users and the mineral utilization department of the agency. Prior to this, a dedicated Telegram chat in a technical support format was created to address issues with the minerals.gov.kz website, but responses stopped coming. Meanwhile, the agency’s officials insist that everything should be conducted electronically, yet the website is not functioning correctly, and it is unclear whom to contact for clarification. Rio Tinto’s representative emphasized the need for someone within the Ministry of Industry to be responsible for interacting with mineral users on the minerals.gov.kz platform, be it an employee or a department, to address all problematic issues, as requested in her appeal to the company’s management.
Furthermore, in her speech, she highlighted that applicants for exploration licenses still have questions regarding the document flow of the Subsoil Fund Management Program (PUFNP), which has been in effect since 2018.
“When an area is included in the PUFNP by order and published on the website in PDF format, the document with coordinates is in Excel. We have encountered a situation where we submit an application – at the time of submission, the territories are available, but when we receive a response and check the Excel document, the territories have already been modified. The coordinates in the document itself are changed, and additional ones are added in the order, making it a dynamic application with evolving coordinates. The question arises as to why we apply based on blocks while the territories are presented in coordinates. This issue pertains to human error and is a technical matter,” explained Olga Petrova.
It is worth noting that, according to Erlan Akbarov, apart from restricted access territories, such as nature conservation zones, water bodies, and populated areas, 100% of territories available for mineral users to apply for exploration licenses have been made accessible. Moreover, PUFNP will undergo updates, as stated by Akbarov in an interview with inbusiness.kz during the sidelines of the conference.
Incidentally, the challenges in communication with the relevant mineral utilization department were also addressed in his speech at the conference by Nikolai Kamensky, the head of the geological exploration company “Dva Key.”
“Unfortunately, it seems that the Ministry (of Industry) is more inclined towards mineral users and is evading geologists. Iran Sharkanovich, it is extremely difficult to reach you and your department (of mineral utilization). Resolving certain matters also proves challenging, as your employees are formally unavailable. Instead of calling and requesting missing documents, if any, they simply issue refusals. This creates additional work for us, as all the documents have to go through the process again, wasting time and impeding progress in investments. Therefore, I believe there are purely organizational issues that need to be addressed. Well, it is not the most significant problem in our country,” expressed the renowned geologist in his address to the Vice Minister.
“In Pursuit of the Positive”
It is intriguing to observe that domestic industry leaders are not trailing behind their foreign counterparts in the quest for valuable metals.
“On August 1st, we emerged victorious in an auction for a specific area. To my knowledge, several other companies also participated in the bidding process for this area. It turned out to be one of the most sought-after lots, and we secured it for a sum of approximately 424 million tenge. This area, situated in the northern Pribylkhashye, holds promise for copper exploration. Geological surveys were conducted in this region during the Soviet era. Apart from us, Rio Tinto, in collaboration with ‘Kazgeology,’ also conducted a study of this area. The exploration extended to a depth of 200 meters. There are prospects and estimated resources of up to 200,000 tons of copper, albeit with a relatively low content of around 0.2-0.3%. Our primary focus is to delve deeper into this area. It remains unexplored at significant depths. Our geologists have identified potential and indications that these ore deposits continue at greater depths, and we plan to conduct thorough investigations up to approximately 700 meters,” stated Azamat Shalabayev, the CEO of ERG Exploration, a subsidiary of the Eurasian Group, during an informal discussion at the conference.
Previously, inbusiness.kz reported on the successful bidders of the exploration license auction held in early August. It is worth recalling that since 2015, Rio Tinto had been conducting geological surveys in search of substantial copper reserves in the Korgantas and Balkhash-Saryshagan areas of the Karaganda region. Unfortunately, the geological examination of Korgantas did not yield significant results for the Anglo-Australian company, resulting in the termination of their mineral use contract.
“Active exploration activities are being carried out in the South-Kempirsai area. Over the past six years, in collaboration with ‘Kazgeology,’ we have drilled approximately 100,000 linear meters in this area. We have recently renewed our exploration contract, which required nearly a year of work… and in the coming three years, we plan to drill an additional 100,000 linear meters in search of chrome deposits,” added the senior executive of ERG Exploration.
He further clarified that the company is open to the possibility of acquiring promising mineral use licenses.
“We also intend to utilize this approach. We receive proposals from junior companies, and we evaluate their projects. However, thus far, we have not come across any promising ventures with confirmed reserves and resources,” explained Azamat Shalabayev when asked about the company’s stance on the junior market.
He also mentioned that the company does not restrict itself to specific types of minerals.
“We have a comprehensive program in place for digitizing geological data repositories. We have established dedicated teams for different areas of focus. Each team is responsible for exploring core metals such as chrome and manganese, while other teams handle various metals, including copper, polymetals, as well as rare earth elements (REEs) and rare earth metals (REMs). Thus, we will continue to explore in these directions, as per the management’s directive to discover new metals that are atypical for our group,” stated the head of ERG Exploration.
Coordination and Human Resources
Overall, most conference participants expressed their appreciation for the organization of the Ministry of Industry and the Committee on Geology.
“Today, it has been repeatedly emphasized that this conference is a momentous event. This is absolutely true; such a large-scale gathering has never taken place before. The geological community of Kazakhstan has demonstrated its readiness to unite and address common challenges. It is understandable that a conference held for the first time in 33 years cannot instantaneously resolve all accumulated issues. Nevertheless, specialists have reached an agreement to lead, coordinate tasks, and act in unison. The conference covered a wide range of both general and applied topics. Resolving some of these challenges will necessitate a considerable amount of time, while others can be tackled through concerted efforts,” commented geologist Mahmud Muradov in an electronic statement to inbusiness.kz.
However, he also emphasized that addressing the challenges facing the geological industry will require time and a skilled workforce.
“The esteemed geologist, Kanys Imantaevich Satpaev, possessed the unique ability to recognize people’s talents, discern and guide young individuals in the right direction. As a talented organizer, he could select associates in specific scientific fields, and each of them subsequently brought glory to Kazakhstani science through their work and discoveries. I believe that we must continue Kanys Imantaevich’s legacy. We must dedicate significant attention to filling the personnel gap. The post-Soviet era created a 30-year void in terms of skilled professionals. Hence, it is necessary to foster the professional growth of specialists. We need to attract individuals to the industry who possess a fervent passion and a burning desire to contribute. The greater the number of brilliant minds, the more exceptional ideas will”In Search of the Positive”
It is intriguing to note that domestic industry giants are not falling behind their foreign counterparts in the pursuit of valuable metals.
“On August 1st, we emerged victorious in an auction for a specific area. To the best of my knowledge, several other companies were also vying for this area. It turned out to be one of the most sought-after lots, and we acquired it for approximately 424 million tenge. This area, located in the northern Pribylkhashye, holds promise for copper exploration. Geological surveys were conducted in this region during the Soviet era. In addition to us, Rio Tinto, in collaboration with ‘Kazgeology,’ has also examined this area. The exploration extended to a depth of 200 meters. There are prospects and estimated resources of up to 200,000 tons of copper, albeit with a relatively low content of around 0.2-0.3%. Our primary focus is to delve deeper into this area. It remains unexplored at significant depths. Our geologists have identified potential indications that these ore deposits continue at greater depths, and we plan to conduct thorough investigations up to approximately 700 meters,” stated Azamat Shalabayev, the CEO of ERG Exploration, a subsidiary of the Eurasian Group, during an informal discussion at the conference.
Previously, inbusiness.kz reported on the successful bidders of the exploration license auction held in early August. It is worth recalling that since 2015, Rio Tinto had been conducting geological surveys in search of substantial copper reserves in the Korgantas and Balkhash-Saryshagan areas of the Karaganda region. Unfortunately, the geological examination of Korgantas did not yield significant results for the Anglo-Australian company, resulting in the termination of their mineral use contract.
“Active exploration activities are being carried out in the South-Kempirsai area. Over the past six years, in collaboration with ‘Kazgeology,’ we have drilled approximately 100,000 linear meters in this area. We have recently renewed our exploration contract, which required nearly a year of work… and in the coming three years, we plan to drill an additional 100,000 linear meters in search of chrome deposits,” added the senior executive of ERG Exploration.
He further clarified that the company is open to the possibility of acquiring promising mineral use licenses.
“We also intend to utilize this approach. We receive proposals from junior companies, and we evaluate their projects. However, thus far, we have not come across any promising ventures with confirmed reserves and resources,” explained Azamat Shalabayev when asked about the company’s stance on the junior market.
He also mentioned that the company does not restrict itself to specific types of minerals.
“We have a comprehensive program in place for digitizing geological data repositories. We have established dedicated teams for different areas of focus. Each team is responsible for exploring core metals such as chrome and manganese, while other teams handle various metals, including copper, polymetals, as well as rare earth elements (REEs) and rare earth metals (REMs). Thus, we will continue to explore in these directions, as per the management’s directive to discover new metals that are atypical for our group,” stated the head of ERG Exploration.
Coordination and Human Resources
Overall, most conference participants expressed their appreciation for the organization of the Ministry of Industry and the Committee on Geology.
“Today, it has been repeatedly emphasized that this conference is a momentous event. This is absolutely true; such a large-scale gathering has never taken place before. The geological community of Kazakhstan has demonstrated its readiness to unite and address common challenges. It is understandable that a conference held for the first time in 33 years cannot instantaneously resolve all accumulated issues. Nevertheless, specialists have reached an agreement to lead, coordinate tasks, and act in unison. The conference covered a wide range of both general and applied topics. Resolving some of these challenges will necessitate a considerable amount of time, while others can be tackled through concerted efforts,” commented geologist Mahmud Muradov in an electronic statement to inbusiness.kz.
However, he also emphasized that addressing the challenges facing the geological industry will require time and a skilled workforce.
“The esteemed geologist, Kanys Imantaevich Satpaev, possessed the unique ability to recognize people’s talents, discern and guide young individuals in the right direction. As a talented organizer, he could select associates in specific scientific fields, and each of them subsequently brought glory to Kazakhstani science through their work and discoveries. I believe that we must continue Kanys Imantaevich’s legacy. We must dedicate significant attention to filling the personnel gap. The post-Soviet era created a 30-year void in terms of skilled professionals. Hence, it is necessary to foster the professional growth of specialists. We need to attract individuals to the industry who possess a fervent passion and a burning desire to contribute. The greater the number of brilliant minds, the more exceptional ideas will emerge. It is imperative
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