Nazarbayev wants to see progress on licence ban soon

February 21, 2013

ASTANA, Jan 23. Kazakhstan’s president has urged his government to move more quickly to lift a four-year moratorium on issuing new mineral exploration licences to develop new deposits and ease the grip of local clans on the country’s natural wealth.

"I have already given an order on lifting the moratorium," Nursultan Nazarbayev told the government during a meeting which was broadcast live on Wednesday.

"This is needed to attract investment in developing new deposits. I have given you the go-ahead … So what’s the problem?" he said.

Nazarbayev, 72, who has run central Asia’s largest economy for more than two decades, was referring to his instruction given to the government last November to remove the moratorium on subsoil use.

"I charge Deputy Prime Minister (Aset) Isekeshev with proposing concrete steps within one month to drastically rectify the situation," said Nazarbayev, who wields vast powers.

"As for geological and exploration works, you must report to me personally during the first half of the year."

Kazakhstan holds uranium reserves second only to Australia’s. Five times the size of France, the country also has the world’s largest chromium reserves and substantial copper, iron ore and zinc deposits.

But less than 15 percent of Kazakhstan’s explored metals reserves are currently in production, official data show, with only 75 of 282 identified gold deposits and 19 of 55 iron ore deposits in operation.

Despite its prospectivity, Kazakhstan receives less than 1 percent of global investment in metals exploration. Miners have no guarantee they will be able to develop any reserves that they might discover.

Companies including global miner Rio Tinto and London-listed ENRC have grown frustrated at the red tape encountered while trying to explore and develop new resources in Kazakhstan.

"World-class company Rio Tinto, which is ready to invest tens of millions of dollars in exploration virtually from scratch, had spent two years roaming our government offices," Nazarbayev said.

Umirzak Shukeyev, who heads sovereign wealth fund Samruk-Kazyna, told Nazarbayev the fund’s mining unit Tau-Ken Samruk had signed a memorandum on a 50-50 venture to prospect for copper in the Kostanai region in northern Kazakhstan. He gave no further detail.

State-owned Tau-Ken Samruk is currently exempt from the moratorium on new licences imposed in 2008 pending a restructuring of the tax code and subsoil law, which came into force within a year.

Nazarbayev said massive foreign investment was sorely needed in his country where an average of $20 was spent on geological exploration per square kilometre, compared with $45 in neighbouring China, $167 in Australia and $203 in Canada.

Nazarbayev said the arrival of large-scale foreign investors would undermine the power of influential clans that cling to control of mineral deposits in the regions.

"Mainly bureaucrats and their relatives have grabbed certain deposits," he said without elaborating. "They have clung to them up to now like a dog in the manger."

Source: Reuters