Kazakhstan has gone for gold these olympics, collecting no less than 6 gold medals. Whether we are talking about the metal or the medal, Kazakhstan is no stranger to gold. Here, Zhanibek KHASSAN, Director of the Public Finance Transparency Program at the Soros Foundation Kazakhstan, has given us an overview of the gold mining sector in the country.
Kazakhstan is a former Soviet republic and Central Asia’s biggest economy, and is rich in oil, gas and minerals. Kazakhstan is demonstrating very good results at the London Olympic Games – with 6 gold medals and 2 bronze.
In the PWYP blog series devoted to the results of the Games and resource rich-countries I would like to stress the Kazakhstani mining sector, which is one of the leading gold mining in the Commonwealth of Independent States and is in world’s top ten gold mining countries.
Gold reserves in Kazakhstan today total around two thousand tons, (or 4% of the world’s gold), which allows the country to take 8th place in the world on this indicator. These reserves are concentrated in 287 gold fields, located in almost all the regions of the country.
From 1996 – 2010 Kazakhstan produced about 397 tons of gold. Production of commodity products (refined gold) for the past 15 years continues to fluctuate at around 10 tons. In 2010 the volume of unprocessed gold in Kazakhstan amounted to 29.9 tons, and refined was13.3 tons. That’s the equivalent of 74 750 and 33 250 golden Olympics medals respectively! (taking into account that each medal is approximately – 400g).
Today, almost half of the gold madeby Kazzinc (a subsidiary of Glencore) and Kazakhmys corporations is as a byproduct of copper and zinc production. These companies operate large refineries (the only two gold refineries in Kazakhstan) . The refining capacity of Kazzinc is about 50 tons of gold and Kazakhmys’ is 10. However, the high cost of processing the gold mean these corporations only use the refine gold to a third of their capacity. As a result, many gold mining companies are forced to process the concentrate overseas. However, Kazakhstan plans to launch a third refinery in the country by the end of the year as part of its ambitious plan to increase gold production to 70 metric tonnes by 2015.
In 2010 Tau-Ken Altyn, a subsidiary of JSC National Mining Company Tau-Ken Samruk , was established. The new company will be focused on the exploration, extraction and processing of precious metals. Tau-Ken-Altyn have got all free of subsoil mining fields. The company has already prepared a list of 60 most attractive gold deposits. In general, the state program to 2014 in the “gold” industry provides a significant increase in ore production capacity (up to 8 million tons) and concentrates (53 tonnes), construction of refinery capacity of 25 tons, as well as the creation of three small businesses producing jewelry, with total capacity of 0.8 tons
According to the Committee of geology and resource exploitation under the Ministry of Industry and New Technologies, information prepared in the frame of EITI implementation shows that the total amount of state income generated from gold-mining companies in 2010 was about 157 million dollars and in 2011 it was 128 million dollars. This is about 9 and 6% of revenues generated by all mining industry in two last years.
The national stakeholder council on EITI promotion adopted a methodology which defines a threshold for the payments of mining companies. This threshold defines which companies’ payments will be audited by an independent audit company and then revised by NSC. Therefore, incorporated thresholds helps theo public pay more attention to most valuable tax payments for the state budget and most active mining companies. At present time this threshold is defined as 100 thousand dollars for mining companies, and 200 thousand for oil and gas companies.
Taking into account that there were 400 registered and licensed 400 mining companies in 2010 and 384 mining companies in 2011, justonly 154 and 175 mining companies in respective years paid more than 100 thousand dollars to the state budget.
33 gold-mining companies paid more than 100 thousand dollars to the state budget in 2010 and 35 in 2011 and they accumulated most revenues for the state budget from gold mining sector. 84 and 77 gold-mining companies paid less than 100K USD the threshold