MINEX Forum

Website: Eurasia.com

  • Tragedy at the “Kostenko” Mine: the names of the miners who will be buried on October 31 have become known

    Tragedy at the “Kostenko” Mine: the names of the miners who will be buried on October 31 have become known

    Mourning continues in the Karaganda region for the miners lost in the Kostenko Mine accident. Funerals have commenced, with 14 workers interred on October 30th both in Karaganda city and surrounding towns. Many of the deceased had previously served at other company facilities.

    Further farewells are scheduled over the next two days, with the bulk planned for this coming Tuesday. Through social networks, eight additional memorial services have been noted already set for October 31st honouring Marat Fazlov, Olzhas Kamiev, Askhat Sapargaliev, Vladimir Kataman, Damir Kalimullin, Ivan Menikov, Akynzhan Orakbayev and Yuri Polovinka.

    The local administration and ArcelorMittal Temirtau are aiding the families in funeral arrangements. It remains that an explosion inferred to have resulted from a methane blast transpired on October 28th, with 45 bodies recovered and one miner still searched for. The first names released bring some solace amidst this tragedy which the President strongly condemned. A criminal inquiry has rightly commenced as the ownership transfer process continues.

  • In Kazakhstan, there is a proposal to allow the development of mining waste within populated areas.

    In Kazakhstan, there is a proposal to allow the development of mining waste within populated areas.

    The proposal to allow the extraction of technogenic mineral formations (TMF) located within populated areas and within 1 km of them is stated in an advisory document on regulatory policy for the draft law of the Republic of Kazakhstan “On Amendments and Additions to Some Legislative Acts of the Republic of Kazakhstan on Subsoil Use to Improve the Investment Climate.”

    In Kazakhstan, there is a proposal to allow the development of mining waste within populated areas.”The prohibition established by Article 25 (Subsoil Code, which prohibits subsoil use operations on lands within populated areas and within 1 km of them – italicized) prevents obtaining subsoil use rights for TMF located in populated areas. At the same time, underground extraction of TMF is not possible as the objects are located on the surface of the land. In turn, granting the right to extract solid minerals (TPM) from TMF within populated areas will free up land, improve the environmental situation (through the removal of ore or tailings), and create jobs,” the published document states.

    Developers note that a significant portion of TMF resulting from mining activities is currently located within populated areas or within a 1 km protective zone: terricones in the East Kazakhstan region, Balhash, Kentau tailing ponds, and so on. According to established practice, subsoil users have had to buy land and houses from local residents, compensating for their relocation to other populated areas. Now, this practice is effectively being proposed to be discontinued.

    However, developers believe that the extraction of minerals from such TMF should be aimed at exporting the TPM from the extraction site without processing them on-site, as such activities would exacerbate the environmental situation. Therefore, the document emphasizes that when signing agreements to support the local population and coordinating environmental impact assessments (EIA), requirements for preserving the environmental situation will take precedence.

    In addition, the document proposes to ease the conditions for artisanal miners. According to the code, applicants for an artisanal miner’s license must own a cargo truck with a capacity of no more than 10 tons, drilling equipment, as well as an excavator or bulldozer with a total bucket volume of no more than half a cubic meter. However, for artisanal miners, acquiring an excavator and bulldozer for stripping and reclamation work is costly and impractical expenditure, so the use of equipment on a rental basis is proposed to solve this problem.

    The developers also suggest regulating, following the example of foreign legislation, the amounts to be paid by subsoil users for using land plots for geological exploration within the framework of private or public servitude (limited right to use someone else’s land). When establishing private servitude, a fee for servitude and compensation for damages are provided. However, because the parties cannot reach an agreement on this matter, the subsoil user cannot start geological exploration. The document notes that the absence of regulation on the amount often leads to unjustified overestimation of expectations regarding the amounts from landowners’ side.

  • The unprofitable “Bast” requested a loan from the Development Bank of Kazakhstan

    The unprofitable “Bast” requested a loan from the Development Bank of Kazakhstan

    The company “Bast,” engaged in the development of the Maxut deposit in the Abay region, has approached the Development Bank of Kazakhstan for debt financing for its project, as reported by inbusiness.kz. This loan was requested for the “expansion of the ore processing plant for the production of copper and nickel concentrates.” Currently, an “indicative analysis” of the project is being conducted, as indicated in the “projects under consideration” section on the BRK website.

    The primary shareholder of “Bast” is the businessman Timur Turlov, who owns 74.18% of the company’s shares, with an additional 8.14% belonging to the affiliated Freedom Finance Global Plc, as stated on the Kazakhstan Stock Exchange website. As of the end of the previous year, Turlov controlled 75.4% of “Bast” shares, while the share held by Freedom Finance Global Plc was minimal, with just 1 share, according to annual reports. Additionally, at the end of 2022, the liquidation commission of Bank Astana retained a noticeable stake in the company, amounting to 5.26%. It’s possible that this share has been reduced at the beginning of this year, as information about it is no longer published in stock summaries.

    The initial public offering of “Bast” shares on the Kazakhstan Stock Exchange took place in 2014, as stated on the company’s website. In 2018, an ore processing plant was put into operation at the Maxut deposit for the production of copper and nickel concentrate. Despite this, “Bast” remained unprofitable over the last two years. According to the financial report for the past year, during that period, the company’s losses exceeded 494 million tenge, despite revenue of 6.3 billion tenge. However, this is half the losses recorded in 2021, which were 1.2 billion tenge.

    Over the past five years, the company attracted small loans from Turlov and other individuals, mainly of a short-term nature. Interestingly, “Bast” also received $2 million as an advance payment from the trader Trafigura for the delivery of copper concentrate, to be repaid by the end of July this year. It’s worth noting that the company had no revenue from the sale of nickel concentrate with a discount last year.

    In 2021, the company was involved in a legal dispute with TO “Service Company “Semey” regarding the recognition, acceptance of work performed, and the recovery of a debt in favor of TO “Service Company “Semey” in the amount of 66,573 thousand tenge. The company had its bank account in AO DB “Sberbank Kazakhstan” frozen in the amount of $156,780 USD (equivalent in tenge as of December 31, 2021 – 67,677 thousand tenge) as part of the execution of a decision by the specialized interdistrict economic court of Almaty. The company filed an appellate complaint for a review of the first-instance decision. In June 2022, the court ruled to uphold the decision of the specialized interdistrict economic court of Almaty and dismissed the company’s appeal. As of December 31, 2022, the company’s obligation has been fully settled through repayment. There were no frozen funds on the company’s account as of December 31, 2022, as noted in the 2022 annual report.

    In total, there were reserves of 112 thousand tons of copper and 79 thousand tons of nickel at Maxut, with the potential for an increase, as mentioned in the financial report. The subsoil use contract for “Bast” was extended last December until May 2042. From 2028, the company will begin using a new metal extraction technology that will reduce operational costs by 25%, as stated in the financial documentation.

    It’s worth noting that the expansion of “Bast” is not the only project involving Timur Turlov that has recently come to the attention of BRK. According to the “projects under consideration” section, the public company AKASHI Data Center PLC has applied for bank financing for the project “Construction of a Tier IV data center with 4,000 racks,” which is currently at the “business proposal” stage.

    Additionally, TO “Production Company “Cement Plant Semey” expressed its desire to attract borrowed funds from BRK for pre-export financing in the amount of 1.2 billion tenge. This application, with Timur Turlov listed as one of the beneficiaries, is currently in the “bank expertise” stage.

  • In the nine months of 2023, revenues from Kumtor amounted to nearly 20.5 billion soms

    In the nine months of 2023, revenues from Kumtor amounted to nearly 20.5 billion soms

    In the first nine months of 2023, Kyrgyzstan received 20 billion 489 million soms from the development of the Kumtor gold deposit, according to the Minister of Finance Almaz Baketaev.

    Of this, 7 billion 317 million soms contributed to GDP. A further 132 million soms were allocated for modernisation at the Kumtor Gold Company, 537 million soms went to the Issyk-Kul regional development fund and 322 million to the Naryn fund.

    In 2022, revenue from Kumtor totalled 34 billion 751 million soms. This incorporated 16 billion 849 million soms in outstanding payments covering several years, equivalent to 4% of GDP.

    President Sadyr Japarov stated 17.3 tons of gold were extracted at Kumtor in 2022. Taxes and mandatory payments totalled 32.2 billion soms with net profit of 371 million dollars.

    Thus far in 2023, 14 tons of gold have been extracted according to Kumtor Gold Company President Almaz Baryktabasov. In 2022, 140 million dollars in dividends were paid to the state budget representing approximately 25% of profits.

    The Kumtor Gold Company develops the Kumtor deposit in Issyk-Kul region. Kyrgyzstan gained full ownership after reaching consensus with Centerra Gold in April 2022 regarding outstanding environmental and economic claims.

  • Ivanhoe founder Robert Friedland awarded Mongolia’s Order of the Polar Star

    Ivanhoe founder Robert Friedland awarded Mongolia’s Order of the Polar Star

    Mining magnate Robert Friedland, the esteemed founder of Ivanhoe Mines (TSX: IVN) and Ivanhoe Electric (TSX: IE), has received official recognition from the government of Mongolia for his invaluable contributions to the nation’s mining industry.

    On October 9, 2023, Mongolian President Ukhnaagiin Khürelsükh bestowed upon Friedland the prestigious Order of the Polar Star, the highest civilian honor awarded to a foreign national, in recognition of his leadership in the exploration and development of Oyu Tolgoi. This remarkable site is renowned as one of the largest copper and gold deposits ever discovered.

    The Order of the Polar Star, established in 1936, has been previously bestowed upon illustrious figures such as former US President Barack Obama, former US Secretary of State Hillary Clinton, and former US Senator John McCain.

    Expressing his gratitude, Friedland remarked in a press release on Monday, “We extend our heartfelt appreciation to the government and people of Mongolia for this exceptional accolade. Our experiences in the country, including the discovery and development of the extraordinary Oyu Tolgoi copper-gold deposit, will forever hold a special place in our hearts.”

    Between 1996 and 2012, Friedland’s original Ivanhoe Mines group conducted mining operations across Mongolia, Australia, China, Myanmar, South Korea, and Fiji. Initially established in 1994 as Indochina Goldfields with a focus on mining endeavors in the Asia Pacific region, the company later adopted the more encompassing name Ivanhoe Mines in 1999.

    Friedland served as the founding president and CEO of the original Ivanhoe Mines from June 1996 to May 2006 and again from October 2010 to April 2012. He also held the esteemed positions of executive chairman and chairman for a remarkable 17 years until May 2011.

    In 2000, the original Ivanhoe Mines commenced exploration activities in Mongolia, leading to a decade of discoveries that unveiled a 12.4-kilometer-long chain of first-rate copper and gold deposits in the South Gobi region, now famously known as Oyu Tolgoi.

    Open pit mining operations commenced in 2011, and the copper concentrator, the largest industrial complex ever constructed in Mongolia, began processing mined ore into copper concentrate in 2013.

    During this period, the Australian mining giant Rio Tinto gained control of the original Ivanhoe Mines and, as per the agreement with Friedland, relinquished the Ivanhoe identity and rebranded the company as Turquoise Hill Resources, marking yet another chapter in the ongoing saga of Ivanhoe Mines.

    In 2015, Oyu Tolgoi secured a noteworthy $4.4 billion finance facility from a syndicate of 20 international financial institutions, one of the largest project finance arrangements ever arranged in the global mining industry. The deal included agencies representing the governments of Canada, the US, and Australia, who collectively agreed to a total debt capacity of $6 billion.

    Between 2014 and 2017, the Oyu Tolgoi mine produced an impressive reported output of 780,000 tonnes of copper, 1.8 million ounces of gold, and 4.5 million ounces of silver, generating $2.1 billion in operating cash flow (before interest and taxes).

    However, the majority of Oyu Tolgoi’s vast mineral wealth lies beneath the surface, where copper grades are 360% higher compared to those found in the open pit. In January 2022, Oyu Tolgoi received approval to commence underground operations, with sustainable underground production anticipated in the first half of 2023.

    According to Rio Tinto, Oyu Tolgoi is projected to produce an average of approximately 500,000 tonnes of copper per year from 2028 to 2036, from both open pit and underground sources. This substantial output is sufficient to support the production of around 6 million electric vehicles annually and an average of approximately 290,000 tonnes of copper over the mine’s estimated 30-year lifespan.

    Friedland’s receipt of the award from Mongolia adds to his extensive list of accolades garnered over his illustrious career spanning nearly three decades in the mining industry.

    In 1996, when Friedland served as co-chairman of Diamond Fields Resources, he was recognized as Developer of the Year by the Prospectors and Developers Association of Canada (PDAC) for his remarkable contributions to establishing and financing mineral exploration and development companies worldwide. This honor was, in part, a testament to his leadership role in the development of the Voisey’s Bay nickel mine in Labrador, Canada.

    In August 2011, Friedland was bestowed with the Dealmaker of the Year Award for the original Ivanhoe Mines (later renamed Turquoise Hill Resources in 2012) by Australia’s Diggers and Dealers Mining Forum. This esteemed recognition acknowledged his exceptional aptitude in managing the intricate logistical aspects of asset development, which had captivated the industry for many years.

    In March 2012,Mining billionaire Robert Friedland, the founder of Ivanhoe Mines (TSX: IVN) and Ivanhoe Electric (TSX: IE), has been officially honored by the Mongolian government for his significant contributions to the country’s mining industry. On October 9, 2023, President Ukhnaagiin Khürelsükh presented Friedland with the Order of the Polar Star, Mongolia’s highest civilian award for a foreign citizen, recognizing his leadership in the discovery and development of Oyu Tolgoi, one of the world’s largest copper and gold deposits.

    The Order of the Polar Star was established in 1936 and has previously been awarded to esteemed individuals such as former US President Barack Obama, former US Secretary of State Hillary Clinton, and former US Senator John McCain.

    Expressing his gratitude, Friedland stated in a press release on Monday, “We would like to sincerely thank the government and people of Mongolia for this very special award. Our experiences in the country, including the discovery and development of the exceptional Oyu Tolgoi copper-gold deposit, will forever have a special place in our hearts.”

    Between 1996 and 2012, Friedland’s original Ivanhoe Mines group conducted mining operations across Mongolia, Australia, China, Myanmar, South Korea, and Fiji. Initially known as Indochina Goldfields when it was founded in 1994, the company later adopted the more universal name Ivanhoe Mines in 1999.

    Friedland served as the founding president and CEO of the original Ivanhoe Mines from June 1996 to May 2006, and again from October 2010 to April 2012. He also held the positions of executive chairman and chairman for a total of 17 years, until May 2011.

    In 2000, the original Ivanhoe Mines began exploration in Mongolia, leading to a decade of discoveries that revealed a 12.4-kilometer-long chain of high-quality copper and gold deposits in the South Gobi region, now known as Oyu Tolgoi.

    Open pit mining commenced in 2011, and the copper concentrator, the largest industrial complex ever built in Mongolia, started processing mined ore into copper concentrate in 2013.

    During this time, Australian mining giant Rio Tinto gained control of the original Ivanhoe Mines and, as per an agreement with Friedland, relinquished the Ivanhoe identity and renamed the company Turquoise Hill Resources, marking another chapter in the ongoing Ivanhoe Mines story.

    In 2015, Oyu Tolgoi secured a $4.4 billion finance facility with a syndicate of 20 international financial institutions, making it one of the largest project finance facilities ever arranged in the global mining industry. The agreement included agencies representing the governments of Canada, the US, and Australia, which also agreed to a total debt capacity of $6 billion.

    From 2014 to 2017, the Oyu Tolgoi mine produced approximately 780,000 tonnes of copper, 1.8 million ounces of gold, and 4.5 million ounces of silver, generating $2.1 billion of operating cash flow (before interest and tax).

    However, the majority of Oyu Tolgoi’s vast mineral wealth lies deeper underground, where copper grades are 360% higher than those found in the open pit. In January 2022, Oyu Tolgoi received approval to begin underground operations, with sustainable underground production expected in the first half of 2023.

    According to Rio Tinto, Oyu Tolgoi is now projected to produce an average of around 500,000 tonnes of copper per year from 2028 to 2036, from both open pit and underground sources. This output is enough to produce approximately 6 million electric vehicles annually and an average of around 290,000 tonnes over the estimated 30-year lifespan of the mine.

    Friedland’s recognition in Mongolia adds to the numerous accolades he has received throughout his nearly three-decade-long career in the mining industry.

    In 1996, when Friedland was co-chairman of Diamond Fields Resources, he was named Developer of the Year by the Prospectors and Developers Association of Canada (PDAC) for his role in establishing and financing mineral exploration and development companies worldwide. This recognition acknowledged his leadership in the development of the Voisey’s Bay nickel mine in Labrador, Canada.

    In August 2011, Friedland received the Dealmaker of the Year Award from Australia’s Diggers and Dealers Mining Forum for his success in managing complex asset development logistics. This award recognized his exceptional accomplishments in the industry.

    In March 2012, Friedland was honored as Mining Personality of the Year at the inaugural Asia Mining Awards for his role in Mongolia’s emergence as a major mining investment destination. Ivanhoe’s Oyu Tolgoi copper-gold mining complex was also voted Project Development of the Year.

    In January 2016, Friedland was inducted into the Canadian Mining Hall of Fame, acknowledging his transformative contributions to the Canadian and international mining industries

  • The volume of gold and foreign currency reserves in Uzbekistan has been announced

    The volume of gold and foreign currency reserves in Uzbekistan has been announced

    The gold and foreign currency reserves of Uzbekistan experienced a decline of approximately $1.65 billion in September and a cumulative decrease of $4.7 billion since the beginning of the year. As of October 1, the reserve level reached its lowest point since April 2020, standing at $31.04 billion, as reported by Trend.

    The Central Bank has disclosed updated information concerning Uzbekistan’s international currency reserves, revealing that the official reserves amounted to $31.04 billion as of October 1. This represents the lowest value observed since April 2020.

    In comparison to the preceding month, reserves witnessed a decrease of approximately $1.65 billion, with a total decline of $4.7 billion recorded since the start of the year.

    During the reporting period, the physical volume of gold increased from 12.1 million troy ounces to 12.3 million troy ounces. However, the value of gold decreased from $23.43 billion to $23.05 billion. This decline can largely be attributed to the decrease in gold prices observed in the global financial markets. For instance, the price of 1 troy ounce of gold fell from $1939 on September 1 to $1848 on September 29.

    One of the primary factors contributing to the decrease in gold prices during September is the stringent monetary policy implemented by the Federal Reserve in the United States. In such circumstances, U.S. government bonds become more alluring to potential investors, consequently diminishing interest in purchasing gold.

    According to data provided by the World Gold Council, the Central Bank of Uzbekistan sold 46 tons of gold in the first eight months of this year, while acquiring 25 tons of gold. Considering that a significant portion of the country’s reserves is stored in gold, fluctuations in the price of this precious metal exert a noteworthy impact on the overall reserve assets.

  • Chaarat Gold Holdings Ltd. will focus on the development of assets in the Kyrgyz Republic

    Chaarat Gold Holdings Ltd. will focus on the development of assets in the Kyrgyz Republic

    Chaarat Gold Holdings Limited, a British company engaged in gold asset development in Armenia and Kyrgyzstan, has successfully concluded the sale of its operating asset, the Kapan deposit in Armenia. This strategic move allows the company to focus its efforts on becoming a leading gold mining company by developing its assets in the Kyrgyz Republic.

    Chaarat Gold Holdings Limited possesses the rights to develop the extensive Chaarat gold deposit located in the Kyrgyz Republic. Since embarking on its investment activities in Kyrgyzstan, the company has committed over $170 million towards the exploration of the Chaarat gold deposit, utilizing its own financial resources. In addition to this substantial investment, the company has made significant contributions to the country’s economy, including approximately 1 billion soms in tax contributions to the national budget, around 100 million soms in social payments, and 47 million soms in non-tax payments. Furthermore, the company has transferred nearly 100 tons of gold to the state balance, which is expected to generate royalties and tax payments exceeding $175 million over the initial five years of production. The annual production estimate for this period stands at 94,000 ounces of gold in D’ore bars from the Tulukubash region.

    One of Chaarat’s central objectives revolves around the development and support of the local community. Consequently, the company consistently allocates funds towards sponsorships and social programs, encompassing initiatives such as hospital renovations, the construction of children’s playgrounds, financial support for the education of young professionals, scholarships for students, and the organization of sports events. By championing the region’s sporting endeavors, Chaarat actively contributes to the growth of sports in the area.

    The years spanning from 2020 to 2022 were marked by the unprecedented global challenges posed by the COVID-19 pandemic. Given the novel nature of the virus, the global healthcare community encountered obstacles and casualties in the pursuit of effective treatment. In light of these circumstances, Chaarat extended its assistance during the initial stages of the pandemic in the following ways:

    Provision of PCR amplifiers and PCR reagents for testing purposes to the Kyrgyz government.
    Implementation of comprehensive infection control measures within the workplace to mitigate the spread of the virus.
    Acquisition and donation of a fully equipped reanimobile to the local population.
    Contribution of 10 oxygen concentrators to the Chatkal district.
    Chaarat maintains an unwavering commitment to environmental preservation and adheres strictly to established environmental and conservation standards, both within the Kyrgyz Republic and on an international scale. The company’s future plans for the next two years encompass attracting investments exceeding $200 million for the construction of the Tulukubash project, investment in the development of the Kyzyltash project, and the creation of new employment opportunities.

    It is crucial to recognize that Chaarat consistently strives to operate in harmony with the principles of mutual benefit for all stakeholders, including the local community and the state. Over the past decade, Chaarat has played a pivotal role in the advancement of local communities by generating employment opportunities and providing vital social support.

  • Anglo Asian Mining plc reduced its gold production in Azerbaijan by 41% from January to September

    Anglo Asian Mining plc reduced its gold production in Azerbaijan by 41% from January to September

    Anglo Asian Mining, a British company operating gold deposits in Azerbaijan, has reported a decrease in gold production for the period of January-September 2023 compared to the same period last year. The company produced 28,686 thousand ounces of gold equivalent (GEO), a decrease of 33.4%. This includes 18,771 thousand ounces of gold (a 41.3% decrease), 2,111 thousand tons of copper (an 11.6% increase), and 50,272 thousand ounces of silver (a 65.2% decrease).

    The Gedabek deposit contributed 17,348 thousand ounces of gold (a 41.3% decrease) and 7,924 thousand ounces of silver (a 64.2% decrease) to the company’s production.

    On the global market, Anglo Asian Mining sold 13,406 thousand ounces of gold bars (a 37% decrease) at an average price of $1,949 per ounce during the January-September 2023 period. This is compared to an average price of $1,727 per ounce in the same period in 2022.

    During the first nine months of this year, the company produced 12,194 thousand tons of copper concentrate, marking a 19.4% increase. Of this, 9,006 thousand tons were sold for $13,487 million, a 14.9% increase, according to Interfax.

    Anglo Asian’s President and CEO, Reza Veziri, acknowledged the impact of an environmental inspection conducted by Micon at the Gedabek mine on the company’s performance. The inspection led to a two-month halt of the flotation and agitated leach plant, as well as the cessation of production at the Gedabek contract area in August. Veziri stated that the company is working with the government to address the identified areas for improvement and emphasized that the allegations of environmental pollution were found to be unfounded.

    As of September 30, 2023, Anglo Asian Mining had $1.6 million in cash, compared to $9.6 million on June 30. Additionally, the company paid $4.6 million in final dividends for 2022 in the third quarter.

    Anglo Asian Mining implemented a hedging program, selling 1,000 ounces of gold bars for $1,959 per ounce, resulting in additional revenue of $27,075 per ounce. In total, the company sold 2,900 ounces of gold bars in the third quarter. The company currently holds unsold stocks of precious metals worth $7 million, including gold and silver bars valued at $5.9 million, and copper concentrate worth $1.1 million.

    Anglo Asian Mining conducts its precious metal production from the Gedabek and Gosha contract areas. The company plans to commence production from the Vejnali and Gilar deposits this year. Under the production-sharing agreement signed in 1997, Anglo Asian Mining holds the rights to develop eight contract areas in Azerbaijan, with the country’s share in the contract standing at 51%.

    For 2023, the company forecasts a production range of 30,000 to 34,000 ounces in gold equivalent. Specifically, Anglo Asian Mining expects to produce 22,000 to 23,000 ounces of gold and 2,100 to 2,200 tons of copper.

    According to the strategic growth plan for 2023-2028, the company aims to increase its production of precious metals in Azerbaijan. By 2028, the production is projected to reach 175,000 ounces GEO, marking a 3.2-3.5 times increase from 2023.

  • ERG has entered into a five-year agreement for the supply of cobalt with EVelution Energy.

    ERG has entered into a five-year agreement for the supply of cobalt with EVelution Energy.

    Eurasian Resources Group (ERG), a leading diversified group in the extraction and processing of natural resources, has entered into a preliminary five-year agreement with EVelution Energy (EVelution), an American company specializing in battery material processing for electric vehicles. The agreement entails the supply of cobalt hydroxide produced by ERG to EVelution’s cobalt processing plant in the United States, which the company plans to begin constructing in 2024. ERG’s cobalt will satisfy nearly half of EVelution’s annual raw material requirements.

    The announcement of the agreement was made during the London Metal Week, an annual conference attended by representatives of the global metallurgical industry. The collaboration between ERG and EVelution will provide an impetus for the development of the mineral production industry in the United States. It will also contribute to sustainable development goals by creating new jobs in the manufacturing sector and supporting global climate change mitigation efforts.

    Furthermore, the partnership between the two companies marks a significant milestone in the development of cobalt processing capabilities in the United States. Currently, there are no industrial-scale cobalt processing facilities in the country, while over 70% of global cobalt sulfate production is concentrated in China.

    Benedikt Sobotka, CEO of ERG, emphasized, “We are pleased to reach this agreement for the supply of cobalt hydroxide with EVelution Energy. This collaboration supports the transition to clean energy and will help meet the pressing needs of the American market in developing cobalt processing capacity.”

    Navaid Alam, President and CEO of EVelution Energy, stated, “We are delighted to establish a long-term partnership with ERG for the supply of cobalt hydroxide. This agreement, along with potential partnerships we are exploring with other suppliers, will ensure a sustainable cobalt hydroxide supply to meet the growing demand of our customers in North America for domestically produced zero-carbon cobalt sulfate, in compliance with the Inflation Reduction Act (IRA).” Cobalt sulfate is a material required for the production of electric vehicle batteries.

    The cobalt hydroxide will be supplied from ERG’s flagship facility, Metalkol, located in the Democratic Republic of Congo, which is one of the world’s leading cobalt producers.

    The EVelution plant is scheduled to commence operations by 2026. The company has announced plans to install its own solar battery-based power source at the facility, with surplus clean electricity being supplied to local farmers. Additionally, the plant will reuse approximately 70% of the water it consumes.

  • NGMK Revises Profit Forecast and Implements “Strict Economy Mode” Following Government Directive

    NGMK Revises Profit Forecast and Implements “Strict Economy Mode” Following Government Directive

    On October 14, 2023, the Supervisory Board of Navoi Mining and Metallurgical Combine, Uzbekistan’s largest enterprise, discussed various matters concerning NGMK’s operations, including a forecasted decline in profits for 2023. Although the board meeting took place on April 8, the news about it surfaced this month. Financial expert Otabek Bakirov was the first to draw attention to it. The Supervisory Board consists of Deputy Prime Minister and Minister of Economy and Finance Jamshid Kuchkarov, First Deputy Advisor to the President on Industry Development, Investment, and Implementation of Foreign Trade Policy Timur Ishmetov, Advisor to the President on Socio-Political Development Ruslanbek Davletov, Director of the Agency for Management of State Assets Akmalkhon Ortikov, and Deputy Minister of Energy Akmal Zhumanazarov.

    The board meeting included a business plan for the company for 2023, which anticipates an increase in revenue from 56.6 trillion to 59.7 trillion soms. However, the plan also forecasts a decrease in net profit to 9 trillion soms ($735 million), which is nearly 6.4 trillion soms lower than in 2022 (15.39 trillion soms), as well as lower than the figures for 2021 (11.3 trillion soms) and 2020 (10 trillion soms).

    Expenses are planned at 39.9 trillion soms, including production expenses of 27.5 trillion soms. It is expected that compared to the previous year, revenue from product sales will increase by 3.1 trillion soms, reaching 59.7 trillion soms (+5.4%), while dividends paid to the government will decrease from 15.3 trillion to 7.8 trillion soms, and tax payments will decrease from 18 trillion to 17.2 trillion soms. Members of the supervisory board noted a sharp increase in expenses compared to 2022 and the cost of gold production, which is expected to lead to a decrease in net profit. Nevertheless, the board provisionally approved the business plan and tasked NGMK’s management with developing measures to optimize expenses for this year and submitting a revised business plan within two weeks. “Gazeta.uz” has sent a request to the Ministry of Economy and Finance regarding the updated business plan but has not yet received a response.

    Following the publication by financial expert Otabek Bakirov, NGMK’s press service announced that the business plan had been revised in collaboration with experts from the Ministry of Economy and Finance, taking into account gold prices on the global market, changes in the exchange rate of the som to the dollar, and a review of expenditure composition. According to the updated forecast, NGMK’s net profit in 2023 will amount to 14 trillion soms (instead of the previously projected 9 trillion soms). However, this is 1.3 trillion soms less than in 2022.

    Umidjon Kostaev, Head of the Budgeting and Controlling Department at NGMK, stated in an interview with “Gazeta.uz” that expenses are projected to increase from 28 trillion soms in 2022 to 32 trillion soms by the end of the year. Initially, the forecasted expenses in April were expected to reach 39.9 trillion soms, but they have been revised. “We calculated the expenses, coordinated them with the Cabinet of Ministers, and presented them to the supervisory board. After the business plan for 2023 is approved, it will be published on the website,” he said.

    Kostaev explained the projected 4 trillion soms increase in expenses by the rise in electricity tariffs (+25%) and gas tariffs (+38%), which he claimed are the largest expenditure items. Earlier, Minister of Energy Zhurabek Mirzamakhmudov informed “Gazeta.uz” that the energy resource tariffs for NGMK and Almalyk Mining and Metallurgical Combine (AGMK) had been increased in accordance with a government resolution, meaning these enterprises have been paying higher rates since April 2022.

    Furthermore, starting from October 1st, “Navoiyazot” has increased the price of chemical reagents, necessary for gold production, by 40%. According to Umidjon Kostaev, the changes in profit forecast, from 9 trillion to 14 trillion Uzbekistani som, were attributed to the implementation of a “strict cost-saving regime.”

    Kostaev explained that they have improved procurement processes by ordering essential goods and materials. They have also closely monitored material expenses for each process and instructed specialists to critically review and develop measures to reduce their volumes.

    The Head of Budgeting and Controlling Department also mentioned that repair works have been postponed. These measures have allowed for a significant reduction in expenses, he added.

    As a result, NGMK expects to generate an income of 64 trillion som by the end of 2023, compared to the previous forecast of 59.7 trillion som in April. Kostaev attributed this change to fluctuations in gold prices.

    The updated forecast indicates that dividend payments to the government will range from 11 to 13 trillion som, while tax payments are expected to reach 20 trillion som, compared to the earlier projection of 7.8 trillion som for dividends and 17.2 trillion som for taxes.

    Regarding the production cost of gold, Kostaev emphasized that NGMK has the lowest cost worldwide. The cost of producing one ounce of gold is $778, which is the lowest among the top 10 gold-producing companies, as highlighted by NGMK.

    However, Kostaev acknowledged the objective reasons behind the increase in production costs.

    It is worth noting that NGMK is the largest enterprise in Uzbekistan, responsible for nearly 15% of the state budget’s revenue (its share was 17.82% in 2022 and 20.1% in 2020).

    The representative of NGMK mentioned that the composition of the supervisory board has changed, and there have been no meetings involving its members since April 8th.