Albert Rau, Vice Minister, Ministry of Investment and Development, Republic of Kazakhstan
The mining industry in Kazakhstan is governed by the Ministry of Investment and Development. What does this say about the importance of this sector for the country's economy?
Albert Rau (AR): The Ministry of Investment and Development has governed the mining industry for the past five years. It continuously supports the industry and provides resource base, energy resources, works on lowering tariffs for railway transportation, and provides other incentives for further development of mining sector. Moreover, the ministry is continuously improving legislation, so that it can reduce unnecessary administrative barriers for international and local investors.
Historically, the mining industry has played a special role in the social life of Kazakhstan. Many mining facilities and processing plants are located in mono-cities, which were built around mining deposits, and today are fully dependent on the mining industry. There are 60 mono-cities in Kazakhstan, and the government has prioritized the development of these cities, as well as the mining facilities, over the past couple of years. The development of these cities relates directly to the development of a competitive mining industry.
The government amended the Law on the Subsoil and Subsoil Use in January 2015. What specific problems did the amendments address and why were they made at this time?
AR: In January 2015, new changes were implemented to the Law on the Subsoil and Subsoil Use. These changes sought to strengthen the legislation governing the mining industry, improve the investment climate, and attract foreign direct investment in the mining sector. The main new feature of the law is the simplified process of granting rights, based on the Australian method, for unexplored pieces of land (not more than two square kilometers per one block). We expect to see the first contracts based on this scheme in the second and third quarter of 2015 and to auction at least 100 areas in total this year.
The law will also simplify access to geological data. We managed to dramatically decrease the time required to obtain such information from 240 days to one day. Moreover, we simplified the procedure for granting exploration contracts and small deposits, to remove extra administrative barriers.
Overall, the new law will increase transparency in decision-making and remove administrative barriers on all levels. These changes should boost the development of junior companies and simplify procedures for all mining companies.
Another revolutionary change was the introduction of a mining code, which will reflect the specificity of minerals more clearly. The code will also create an impetus to switch to international resource estimation standards.
Kazakhstan is competing with mining jurisdictions such as Peru, Chile, the DRC and others for international investment. What does Kazakhstan need to do to attract international investment?
AR: We work on several events to attract international investors and companies to work in Kazakhstan. For the last six years, we have organized the international "Astana Mining & Metallurgy" (AMM) Congress. Recently, Kazakhstan received the right to host International Mining Congress in 2018. After EXPO 2017, we will have the infrastructure in place to host an event of such multitude and with so many international guests.
Kazakhstan remains largely undervalued by the international mining community, which is why events such as the AMM Congress and International Mining Congress will help to increase the country's visibility and recognition.
Mining companies globally have difficulties finding qualified staff. How do the government and local universities address this problem?
AR: We certainly have a problem with finding the right talent, and indeed within the Exploration and Mining Works Program 2015-2019, we emphasized the importance of staff issues, training, attracting young people to work in mining, improving the image of mining professions, and increasing the competitive advantage of Kazakhstan in the international arena for engineering talent. In this regard, we work closely with the Ministry of Education and Science of the Republic of Kazakhstan. In the new school year, the ministry will start new master's programs in fields of geology, hydrogeology and geophysics.
We identified 10 institutes and universities for technical industrialization and are planning to have 532 graduates from bachelor's programs in geology, including 21 "Bolashak" graduates. We always try to attract students from mono-cities to these programs because they will be the ones who will come back to the mining towns and continue to work in the industry.
Together with the assistance of Ministry of Investment and Development, the Association of Mining Companies and Association of Petroleum Geologists created a corporate fund called Zhas Geolog. This fund will increase awareness about geology as a career field and will attract more young school children and student to study geology.
Also in 2015, 60 specialists from Kazgeology will go through a training process at Rio Tinto, 10 employees will train with Geotech, and 16 employees will train with Iluka Resources.
What changes to the mining industry in Kazakhstan do you expect to see over the next three to five years?
AR: 2015 will be a difficult year for the mining industry and the Kazakh economy in general. The current difficulties will reveal those companies who are properly prepared to withstand the challenges presented by the global economy. Amendments to the Subsoil Law and development of a Mining Code will be crucial for the development of mining industry in Kazakhstan.
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