President Sadyr Japarov has signed amendments to the subsoil law, thereby repealing the law that prohibited activities related to geological exploration aimed at the search, exploration, and development of uranium and thorium deposits in Kyrgyzstan. This information was reported by the press service of the Presidential Administration. The law was passed by the Jogorku Kenesh on June 13, 2024. According to the press service, the new law removes the ban on activities related to the geological exploration of subsoil for the purpose of searching for, exploring, and developing uranium and thorium deposits in the Kyrgyz Republic.
Tag: Geological Exploration
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Kazakhstan’s Gold Mining Industry Faces Challenges and Opportunities
At the recent V Forum of Gold Industry in Astana, Aida Alzhanova, Deputy General Director for Strategic Development of Polymetal Eurasia, discussed the current state of the industry and the company’s business growth plans.
Aida addressed concerns about the depletion of the mineral resource base in the gold mining industry, despite experts’ optimism about Kazakhstan’s subsurface resources. The industry faces significant challenges, including the depletion of the mineral resource base, which is seen as a fundamental issue. Gold mining companies are increasing production rates annually, but the real growth in reserves is slow, with exploration and preparation of deposits taking seven to eight years on average. No major gold deposits have been discovered since independence, and many operations rely on Soviet-era discoveries. Some enterprises consider short-term extraction of off-balance ores, and some plants continuously seek external raw materials.
Two primary reasons for these challenges are the low investment attractiveness of geological exploration, especially greenfield, and the bureaucratic process of obtaining permits for sample export for research. Investment incentives, such as real VAT exemptions for both subsoil users and service companies, are seen as effective tools. A significant issue for the entire mining sector is the non-return of payable VAT, which deters investors.
Another major challenge is the low intensity of geological exploration. A bureaucratic process hampers the export of samples for analysis, with delays due to local accreditation requirements. The only internationally accredited laboratory, ALS Kazgeokhimia, is overloaded, with standard analyses taking 45 to 60 days, which is too long given the short field season in many regions. Accelerating exploration would benefit from the launch of a digital geological information database, which would facilitate AI implementation, expedite site selection, and increase the chances of discovering good deposits.
To replenish the mineral resource base, Polymetal Eurasia actively collaborates with junior companies. The 2017 Subsoil Code simplified exploration rights acquisition, boosting domestic junior business and improving geological study quality. The company has about 20 exploration licenses and several for geological study, covering over 70,000 square kilometers. They are also developing digital solutions for managing large volumes of geoinformation and constructing an analytical laboratory with a capacity of 200,000 samples per year.
Following the sale of Russian assets and the company’s rebranding to Solidcore Resources plc, Polymetal’s focus has shifted to prioritizing Kazakhstan. The strategy involves developing processing hubs in eastern and northern Kazakhstan and pursuing greenfield projects to establish new hubs. Long-term growth involves acquiring new deposits with assessed or ready-for-final-evaluation reserves, with domestic junior companies being key partners in this endeavor.
Polymetal plans to invest approximately $1 billion, primarily in building a metallurgical plant in Pavlodar (Irtyshsky GOK) and expanding the company’s asset portfolio, including exploration and M&A activities.
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Kazakhstan Proposes to Declassify Rare and Rare Earth Metal Deposits
In Kazakhstan, there is a proposal to declassify certain deposits of rare and rare earth metals, aiming to expedite the development of these valuable resources, according to inbusiness.kz. Experts predict that the demand for rare and rare earth metals, now crucial for many developed countries, will quadruple by 2040. Consequently, the active development of such deposits could significantly boost the nation’s economy.
Deputy Andrey Lukin, who suggested declassifying the deposits, stated that the next step towards successful exploitation could be simplifying the licensing process for exploring Kazakhstan’s subsoil and expanding the areas for geological exploration. Additionally, Mr. Lukin emphasized the need to implement technical and financial support mechanisms for both local and foreign investors, alongside improving environmental standards.
The World Bank reports that Kazakhstan possesses over 5000 unexplored sites with critically important rare metals, with an estimated value exceeding $46 trillion.
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Modern Approaches Revolutionize Geological Exploration, Highlighted at Astana Forum
Modern geologists are no longer solely reliant on physical surveys for discovering new deposits, as the integration of drones and digital technologies has become commonplace. Russian scientists recently shared insights at the Astana forum on how they unearthed the world’s largest gold-copper asset – the Malmyzhskoye deposit, as reported by IA El.kz. During the 14th MINEKS Kazakhstan Mining and Geological Forum held in Astana, the Institute of Geotechnologies (IGT) presented an overview on digitalization in geological exploration. Executive Director of IGT, Dmitry Agapitov, highlighted the evolution of exploration methods over the past 120 years, starting from 1900. He referenced academician Sergey Smirnov’s conclusion in 1946 that easily accessible deposits were nearly exhausted, leaving only challenging ore bodies. Agapitov emphasized the inherent risks in geological exploration at every stage, encompassing geological, logistical, infrastructural, environmental, marketing, market situation, and legal aspects. He underscored the observable trend: the later an investor decides to enter a project, the higher the “cost” of entry, making subsequent work more expensive. Agapitov summarized that junior companies often have inflated expectations, relying on abstract or imprecise resource assessments, and tend to underestimate the importance of archival materials. Moreover, he pointed out the common issue of stage bypassing in exploration, which leads to subsequent error correction efforts. Inadequate qualification of personnel is also a recurring risk, with experts asserting that this issue extends beyond Russia and Kazakhstan, permeating the global geological exploration sphere. Despite the labor market’s mobility, the problem persists, with professionals transitioning between legal jurisdictions, indicating a global challenge. Another issue is the occasional disregard for modern technologies, particularly among junior companies attempting to cut corners, resulting in decreased project attractiveness and indecision in investment decisions.
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“Tau-Ken Samruk” at MINEX Kazakhstan 2024
The 14th MINEX Kazakhstan Mining and Geological Forum opened today in Astana. The central theme of the forum is “Sustainable Development of the Mining Industry for the Benefit of Society and the Environment.”
Approximately 120 speakers are scheduled to participate, including representatives from government agencies, international organizations, domestic and foreign mining companies, institutional and private investors, technological and consulting companies, the financial sector, industry associations, and more.
Bakyt Chirchikbayev, Chairman of the Board of the National Mining Company “Tau-Ken Samruk,” spoke at the plenary session “Drivers of Development of the Mining and Metallurgical Industry in Kazakhstan.” He discussed the company’s priority projects and plans for further development, particularly focusing on the transfer of 100% of the shares of Kazgeology JSC to Tau-Ken Samruk. Chirchikbayev highlighted several advantages that partners could gain from this integration, stating, “The integration of Kazgeology into the structure of Tau-Ken Samruk will expand the potential scope of cooperation with existing and future partners, as Tau-Ken Samruk specializes not only in geological exploration but also in the further development of projects, including construction and production stages.”
Chirchikbayev also emphasized that geological exploration projects remain a priority: “We plan to continue implementing current projects with partners and simultaneously study all available historical and modern geological information to identify prospective areas. Already, our geologists have made significant progress in this direction.”
Aspects of international cooperation in geological exploration, mining, processing, and the creation of supply chains for uranium and materials critical for “green” energy technologies were discussed in a separate session of the MINEX Kazakhstan forum.
Nariman Absametov, Chief Business Development Officer of the National Mining Company, outlined the main areas of focus for Tau-Ken Samruk regarding critical minerals. Firstly, work continues on the development of economically efficient ore enrichment technology at the largest domestic tungsten deposit, Upper Kayraktinsky. Research into the prospects of heap leaching has begun, and this year will see large-scale laboratory studies. If successful, the next step will be pilot technological tests.
Simultaneously, the National Mining Company is exploring the reconnaissance of rare and rare-earth metals in the Akbulak area of the Kostanay region. Geological exploration is planned to begin soon in collaboration with the American company Cove Capital, with the relevant agreement already signed.
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14th MINEX Kazakhstan Forum in Astana: Sustainable Development in Mining Industry Takes Center Stage
Astana, Kazakhstan – The 14th Mountain Geological Forum, MINEX Kazakhstan, commenced its proceedings, focusing on the theme of “Sustainable Development of the Mining Industry for the Benefit of Society and the Environment.” Over 450 specialists from 235 companies and organizations spanning Kazakhstan and 32 countries across Europe, Central Asia, North and Latin America, Africa, Southeast Asia, the Middle East, and Australia are participating in the event.
More than 50 Kazakhstani and international companies are showcasing cutting-edge technologies for prospecting, extraction, and processing of mineral resources at the forum’s exhibition. Attendance by approximately 1000 specialists from Kazakhstan and abroad is anticipated.
Of notable significance this year is the record participation of foreign investors at the forum, demonstrating keen interest in exploring and developing deposits of precious metals, copper, coal, lithium, uranium, as well as rare and rare-earth metals.
During the plenary session, the Executive Director of AGMP, Nikolai Radostovets, addressed the key directions for the development of the mining and metallurgical industry in Kazakhstan. He emphasized crucial tasks such as replenishing the mineral resource base, enhancing domestic value, and raw material processing.
With the depletion of the mineral resource base and the decline in the content of useful components in ore, there is a pressing need to increase geological exploration activities and provide incentives for investments in geological exploration. In this regard, the association’s leader proposed revising the algorithm for accounting and taxing expenditures on geological exploration. Specifically, he suggested refining the Tax Code to allow deductions for all expenses on geological exploration regardless of the allocation of individual sites into new contracts, as well as establishing deductions for corporate income tax on expenditures for geological exploration of solid minerals through existing extraction contracts.
To incentivize involvement in raw material processing, he proposed enshrining several provisions in legislation. These include exempting subsoil users’ non-extractive mineral resources from the mineral extraction tax (MET) and not levying fees for their re-placement after processing. Regarding non-state-owned mineral resources, extraction should proceed as per current regulations, with a reduced MET rate applied to stimulate their processing.
Addressing tasks related to enhancing domestic value, Radostovets highlighted AGMP’s comprehensive approach aimed at satisfying the needs of domestic manufacturers and mitigating risks for subsoil users in procurement.
“We plan to convene with domestic manufacturers at the NPP platform shortly and propose that for the products that Kazakhstani enterprises can produce, we will enter into off-take contracts,” he specified. “We are prepared to compile and approve a list containing the range of goods manufactured in Kazakhstan or those that can be produced in the medium term. For other types of products, we should have open procurement under standard conditions, possibly from a single source, as these are goods not produced in Kazakhstan.”
The Executive Director of AGMP also underscored the development of raw material processing in Kazakhstan, recalling legislative amendments enacted for licensing metal exports. These amendments, effective from October of the current year, will only grant export licenses if metallurgical enterprises fulfill certain obligations and meet domestic market demands. He noted the association’s preference for stimulating enterprises to process natural resources within the country to foster the development of metal processing and the establishment of metallurgical clusters.
“Investment agreements, processing agreements have not yet kicked off,” expressed R. Baimishev. “There hasn’t been a single agreement with an investment volume of $50 million. Yet, there are proposals to increase them by 10 times – up to $500 million. We believe these are premature steps. Furthermore, we believe it is necessary to stimulate the development of deeper horizons. Mine construction requires substantial investments and government support,” he observed.
In turn, the Chairman of the Board of AO “National Mining Company “Tau-Ken Samruk” Bakyt Chirchikbayev provided an update on the completion of the transfer process of 100% of the shares of AO “NGC “Kazgeology” to “Tau-Ken Samruk” in September of the previous year. He outlined steps taken to optimize management processes, reduce costs, and eliminate duplicate functions, such as merging functions related to geological exploration and joint project implementation with foreign partners. Following the consolidation of these functions, their asset portfolio comprises 53 geological exploration projects, with collaboration involving more than 15 participants.
“It can be noted that we have become a sort of unified window for investors in the geological exploration sector for developing joint projects, and we see ourselves as minority participants in the development of these projects to avoid burdening quasi-state companies with such requirements and to manage companies more flexibly,” he remarked.
Chirchikbayev emphasized that the company’s geologists are currently exploring promising directions and have already identified several prospective sites. “Tau-Ken Samruk” is open to partners, including junior companies, for the development of these projects.
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Proposals for Tax Amendments Aimed at Stimulating Mineral Recycling in Kazakhstan
Nikolay Radostovets, the executive director of the Republican Association of Mining and Metallurgical Enterprises, has suggested resetting the tax rate on mineral extraction (NDPI) for the processing of technogenic mineral formations left after metal extraction. Speaking at the MINEX-2024 forum, Radostovets emphasized the need for tax incentives to stimulate the recycling of technogenic mineral waste. With over 60 billion tons of such waste accumulated in Kazakhstan, only about 11% is currently recycled annually. Radostovets proposed exempting the processing of these waste materials from NDPI, considering them as the property of the licensee after processing. Furthermore, he advocated for a reduced NDPI rate for processing state-owned waste materials.
Additionally, Radostovets raised concerns about the licensing of metal exports, suggesting that licenses should only be granted if internal demands are met. He highlighted the challenge of aligning pricing policies with international standards to promote metal processing. The association also recommends clarifying tax regulations to allow deductions for all expenses related to geological exploration, irrespective of whether specific areas are designated in new contracts.
Radostovets proposed that in cases of unsuccessful exploration, expenses should still be deductible from the annual income of non-contractual activities. He also suggested ensuring the reimbursement of excess VAT on exploration expenses regardless of exploration results or the presence of exports of solid minerals or processed products.
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Kazakhstan Addresses Concerns Over Geological Exploration Funding
In a recent off-site meeting in Kazakhstan, deputies, geologists, and representatives of authorized bodies convened to discuss issues pertaining to geological exploration and potential solutions. It’s worth noting that last autumn, Kazakhstan’s President Kassym-Jomart Tokayev instructed to increase the number of prospective territories for geological exploration to 2.2 million square kilometers by 2026.
During the discussion, industry experts expressed concerns over insufficient funding for exploration activities, as reported by the AGMP press service. Recent records indicate a decline in investments in geological exploration in Kazakhstan. For instance, the value of minerals exported from the country in 2023 exceeded annual investments in exploration by six times.
It is known that Kazakhstan’s investment in geological surveys amounts to only $8 per square kilometer, whereas Russia spends $28 on similar research areas, and Uzbekistan and the United Kingdom allocate $97 and $267 respectively.
In light of this, Erlan Akbarov, the head of the RK Geological Committee, acknowledged that in the absence of funds to bolster efforts in exploring valuable subsoil resources, it might be necessary to reallocate finances earmarked for other purposes. According to Mr. Akbarov, a portion of the budget allocated for scientific research and experimental design work could be invested in geological exploration.
As of today, subsoil users spend around 73 billion tenge on research and development.
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Kazakhstan to Utilize Aerogeophysical Mapping Technology for Metal Deposits Exploration
In a bid to enhance metal deposits exploration, Kazakhstan is set to employ aerogeophysical mapping technology. The regions slated for study include the East Kazakhstan Region (VKO), Abai Region, and the Northern Balkhash. The initiative, covering a cumulative area of 250,000 square kilometers, is reported by inbusiness.kz, citing statements from Andres Blanco, the CEO of Xcalibur Multiphysics, a company specializing in aerogeophysical surveys.
Investors are anticipated to show increased interest in Kazakhstan’s geological exploration armed with geological data obtained through aerogeophysics, according to Mr. Blanco. The initial mapping phase is expected to be predominantly completed within the current year, with some tasks earmarked for 2025. At this stage, magnetic gravity technology will be employed for metal detection.
Following the interpretation of geological data, the second phase, likely to commence thereafter, will involve the utilization of electromagnetic and gravitational reconnaissance methods.
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Kazakhstan Senate Committee Discusses Geological Exploration Challenges
Members of the Senate Parliament’s Committee on Economic Policy, Innovative Development, and Entrepreneurship convened for an off-site session in Eastern Kazakhstan to address pressing issues in geological exploration. Prominent heads of geological companies and representatives from authorized bodies participated in the session.
Senator Shakarym Bukutgutov highlighted the historical significance of mining activities in the eastern region of the country, historically focused on tin, copper, lead, and other metals. However, reserves from previously explored deposits are dwindling. President Kassym-Jomart Tokayev has set a directive to expand geological surveys to 2.2 million square kilometers by 2026.
Notably, the export value of minerals in 2023 was six times higher than the industry’s investments, reflecting concerning statistics. Currently, Kazakhstan allocates a mere eight dollars per square kilometer for geological exploration, significantly lower than comparable countries like Russia, Uzbekistan, and the UK.
The industry requires substantial funding for modernization and development. Efforts are underway to digitize processes, with online portals facilitating licensing and reporting. Additionally, modern research methods such as remote sensing and spectral analysis are being employed to enhance exploration efficiency.
However, the sector grapples with severe staffing shortages, necessitating investment in training programs to equip the workforce with advanced skills. Collaboration with German universities aims to address these challenges and foster innovation in the field.
While the need for foreign investment is acknowledged, there is a call to increase state funding and restore the profession’s attractiveness through social incentives and recognition.