Source: Mining Kazakhstan 2025 review by Haller Lomax LLP. This article is provided for informational purposes only and does not constitute legal advice. For legal advice regarding the mining industry in Kazakhstan, please consult with Haller Lomax LLP directly.
Kazakhstan, a global leader in the mining of uranium, chromite, coal, copper, gold, and zinc, is at a pivotal juncture as it seeks to modernise its mining sector amid regulatory reforms, environmental concerns, and shifting geopolitical dynamics. With mining contributing 13.2% to the country’s GDP in the first three quarters of 2024, the industry remains a cornerstone of Kazakhstan’s economy. Over the past six years, significant investments in geological exploration, exceeding USD 1 billion, have poured into the sector, spurred by legislative reforms under the Subsoil and Subsoil Use Code (SSU Code). This influx of capital has led to the discovery and development of substantial reserves of vital resources, including iron, manganese, gold, uranium, and hydrocarbons, while simultaneously promoting the adoption of cutting-edge technologies to modernise both exploration and extraction. However, the nation faces significant challenges in balancing economic growth with sustainable development and investor confidence, requiring careful navigation to ensure sustainable growth.
Navigating a Shifting Regulatory Landscape:
Kazakhstan is undergoing a significant regulatory transformation aimed at bolstering transparency, efficiency, and investment attractiveness within its mining sector. Several key trends are shaping this evolution:
- Expanding Exploration Horizons: The government’s initiative to open all regions for exploration activities is a significant step towards broadening investor participation. The planned auctioning of existing and returned deposits further emphasises transparency in resource allocation, potentially leveling the playing field for small and medium-sized investors.
- Digitalising Licensing: The Ministry of Industry and Construction (MIC) has embraced digitalisation, streamlining application processes and reducing bureaucratic bottlenecks through an online licensing system. The launch of the minerals.e-qazyna.kz platform in November 2024 offers subsoil users access to geological data, license information, and an interactive map, fostering transparency and efficiency. This system promises to simplify onboarding for investors, minimize administrative delays, and cultivate a more business-friendly environment.
- The National Geological Survey (NGS): Established in 2021 under President Tokayev’s directive, the NGS aims to centralize and digitize geological data, making archived records accessible to investors. With 40% of archives, spanning from the Soviet era to present-day data, already digitized by 2023, the NGS is unlocking a wealth of geological insights that could spark new exploration ventures and refine resource estimation.
Challenges and Concerns Amidst Reform:
While these reforms hold considerable promise, recent legislative developments have sparked concerns among industry stakeholders. The process of legislative change has been criticised for lacking extensive discussion and analysis, potentially compromising inclusivity and leading to unpredictable regulatory environments. Specific concerns include:
- Contentious Legislative Reviews: At the heart of Kazakhstan’s efforts to streamline its mining sector is the Code on Subsoil and Subsoil Use (SSU Code) , enacted in 2018. This landmark legislation introduced a “first come, first served” licensing mechanism, drawing inspiration from Western Australian and Canadian mining laws. By opening up exploration opportunities on this basis, Kazakhstan aims to attract foreign investment and enhance transparency in its mining industry. The SSU Code also distinguishes between regulatory frameworks for solid minerals and hydrocarbons, providing clarity for investors. Additionally, it mandates the use of the KAZRC reporting standard for mineral resources and reserves, aligning Kazakhstan with international best practices. Despite these advancements, the transition period allowing Soviet-era reporting standards has been extended to January 2026, reflecting the complexities of adopting new systems.
- However, frequent changes to tax legislation and regulatory frameworks have raised concerns among investors. According to the Fraser Institute’s 2023 Annual Survey of Mining Companies, Kazakhstan ranked 79th out of 86 countries in terms of investment attractiveness, largely due to perceived political instability and inconsistent policy implementation. To address these issues, the government is developing a new tax code, slated for adoption by late 2025, which could provide much-needed stability.
- Environmental Concerns: Environmental protection is another critical focus for Kazakhstan’s mining sector. The Environmental Code , introduced in 2021, emphasises the “polluter pays” principle and requires companies to adopt best available technologies to minimize their ecological footprint. Mining activities classified as Category I or II facilities—those with significant or moderate environmental impacts—must obtain integrated environmental permits, while smaller operations are subject to less stringent regulations. Despite these measures, environmental enforcement remains a challenge. Illegal mining continues to pose risks, with authorities detecting 77 cases in 2023 using advanced satellite monitoring. Penalties for illegal mining include hefty fines and potential criminal liability, underscoring the government’s commitment to curbing illicit activities. Community relations are equally vital. While public hearings are mandatory for mining projects, there is no explicit obligation to incorporate community feedback into project designs. Nevertheless, leading mining companies like Eurasian Resources Group and Kazzinc have set positive examples by investing in local infrastructure, including schools, hospitals, and sports complexes. These initiatives not only improve living standards but also foster goodwill among affected communities.A proposed new water code could introduce stringent restrictions on activities near water bodies, potentially impacting mining operations and increasing costs.
Climate Change and Sustainable Development
- As part of its broader sustainability agenda, Kazakhstan has committed to reducing its carbon balance by at least 15% from 1990 levels by 2030 and achieving hydrocarbon neutrality by 2060. The government has ratified key international treaties, such as the Paris Climate Agreement, and introduced carbon quotas for industries emitting over 20,000 tons of CO₂ annually. The Concept of Transition to the Green Economy , adopted in 2013, outlines ambitious goals for resource efficiency, infrastructure modernization, and water security. Although rich in “energy-transition minerals,” specific legislative initiatives for these resources are still developing. The 2024-2028 Comprehensive Plan for the Development of the Rare and Rare Earth Metals Industry signals a move towards capitalising on this potential. Projects aimed at constructing reservoirs, upgrading irrigation systems, and building wastewater treatment plants are underway to address water scarcity—a pressing issue in Central Asia. Mining companies are encouraged to contribute to these efforts through agreements on socio-economic development. For instance, holders of exploration and mining licenses must allocate rental fees directly to local budgets, supporting regional development. Furthermore, agreements on investment commitments offer tax incentives for projects that promote sustainable practices, such as establishing processing facilities for solid minerals.
- Reintroduction of Government Oversight: Amendments reintroducing the government’s authority to review compliance with rational and complex subsoil use principles could lead to increased bureaucratic oversight and potential delays. This directly impacts the approval mechanisms for annual production volume, methods used, and other key performance parameters of mining operations.
- Local Content Requirements and State Priority: Proposed measures mandating mining companies to procure more local goods, works, and services, coupled with the threat of substantial fines for non-compliance, and the potential restoration of Tau-Ken-Samruk’s priority right to exploration and mining licenses, could undermine progress made under the SSU Code and deter international investment by increasing bureaucratic hurdles and legal risks.
- Resource Classification Standards Debate: Discussions surrounding the potential repeal of CRIRSCO resource and reserves reporting standards in favor of Soviet-era systems could undermine the government’s efforts to attract investment. Reverting to outdated standards would create uncertainty for international investors accustomed to globally recognized frameworks.
Fiscal and Environmental Pressures:
Beyond regulatory challenges, the mining industry faces increasing fiscal and environmental pressures:
- Taxation and Local Content: Increased subsoil use tax rates and stricter local content requirements, while aimed at boosting domestic manufacturing, could increase costs and reduce the competitiveness of Kazakhstan’s mining sector.
- Water Scarcity and the Water Code: The proposed Water Code, reflecting concerns about water scarcity, could impose restrictive measures on mining activities near water bodies, increasing operational costs and complicating project implementation.
- Stricter Environmental Policies: The growing emphasis on environmental sustainability necessitates stricter environmental policies, requiring mining companies to invest in environmental management systems, emissions-reduction technologies, and biodiversity conservation programs.
Uranium Mining and Technological Advancements:
Kazakhstan’s uranium mining sector, a strategic priority, is experiencing its own set of dynamics:
- Kazatomprom’s Monopoly: Reserving all uranium prospective areas and unmined deposits exclusively for Kazatomprom ensures centralised oversight and maximizes state benefits but may limit private investor participation and potentially slow innovation.
- Technological Innovation: Despite these constraints, the sector is witnessing significant technological advancements, including modernisation of exploration techniques, automation and digitalisation in extraction, and the integration of renewable energy sources.
Foreign Investment and Community Engagement:
Kazakhstan’s mining sector continues to attract foreign investment, primarily from China, Russia, Canada, Turkey, UK and Australia. However, regulatory uncertainty and increased taxation could impact future inflows. Maintaining a stable and predictable legal environment is crucial for sustaining investor confidence. Furthermore, mining companies are increasingly focusing on corporate social responsibility (CSR) initiatives, engaging with local communities through infrastructure development, education, and environmental stewardship.
Outlook for the Next Two Years:
Looking ahead, Kazakhstan’s mining sector will be shaped by ongoing legislative debates and the effectiveness of regulatory reforms. A proposed water code, expected to impose stricter restrictions near water bodies, could significantly impact mining operations. If enacted, these measures may increase costs and complicate project viability, particularly for water-intensive processes.
Investor confidence will depend on the government’s ability to strike a balance between regulatory oversight and market-driven principles. While some reforms promise greater transparency and modernisation, the reintroduction of centralised mechanisms risks undermining trust.
While digitalisation and increased transparency in licensing hold promise, the reintroduction of regulatory unpredictability and the potential strengthening of monopolies could hinder progress. Balancing governmental oversight with market-driven principles, fostering stability and clarity in the regulatory framework, and addressing environmental and social concerns are essential for the sector’s long-term success. By embracing innovation, engaging with stakeholders, and navigating these challenges effectively, Kazakhstan’s mining industry can continue to be a cornerstone of its economy and a key player on the global stage.
Disclaimer: This article is provided for informational purposes only and does not constitute legal advice. For legal advice regarding the mining industry in Kazakhstan, please consult with Haller Lomax LLP directly.
