Ministry of Industry and Infrastructure Development proposed to introduce Australian royalty rate in Kazakhstan

According to Timur Toktabaev, Vice Minister of Industry and Infrastructure Development, the ministry plans to use the experience and conditions of a foreign country.

"The main advantages of Australian royalties are fairer since they are imposed only on the amount that is of commercial interest, that is, how much you actually sold. This eliminates the risks associated with the volatility of stocks," he explained.

Toktabaev also noted that the development of a new Environmental Code will help the country move to an international standard.

“We understand that now there is a struggle for investments in the world, so you need to find a middle ground that will be arranged by the state and the investor,” he said.

In turn, Nikolay Radostovets, executive director of the Republican Association of Mining and Mining and Metallurgical Enterprises, told his vision of the predicted innovation.

"We see that adjustments in the Subsoil Code are needed. We have prepared a package of amendments and know for sure that we need to facilitate the procedures on common minerals. This will allow obtaining cheap materials for state programs and that subsoil users have an interest in supplying these materials. We need amendments about 20% of deviations from the program so that we don’t have to move forward,” he said.

In addition, Radostovets supported the idea of the Ministry of Industry to switch to royalties.

"We should ask the Ministry of Finance and the Ministry of Economic Development to help us with these rates. Everyone talks about royalties on Australian rates, but I think they should be much lower. We should not be afraid of this. We need to understand that Kazakhstan is far from foreign markets. Australia has access to the sea, it is easier for them to deliver their products than for the people of Kazakhstan. The second point is that we are in a cool country and we always have costs that are absent here," he argued.

A representative of the industry also said that the subsoil users are not satisfied with the work of the council of the mining and metallurgical complex under the president.

"In fact, the Prime Minister leads the council. But there are mostly ministry employees, and there are practically no business representatives. I have the impression that they are consulting with themselves. We need to expand the composition of this council, introduce consultants and experts, then hold an enlarged meeting. We need offers on royalty rates on the main metals from the business," Radostovets said.

He also stated that it is necessary to tell investors about whether the process of denationalisation of the industry will continue.

“How will national companies develop? Now the issue of creating a national holding of the MMC is being discussed. Is it necessary at all? Maybe it’s better to give private owners a share? Priority rights that national companies have should be minimised. Why are large non-users not able to participate in them, but state-owned companies can? It is necessary that the investor understands that the attitude towards him will be the same in the country as towards national companies," he stated.

Metallurgists would also like to receive lower rates of a mineral extraction tax on the processing of municipal solid waste.

"We cannot deal with them, because there are the same tax rates as for mining. But this is waste. You take taxes from the salaries of new workers that appear, these are new jobs. Take profits. I think it is necessary to convince the Ministry of Finance and the Ministry of Economic Development that abrupt indulgences are needed for waste," he said.

Concluding, the MMC industry representative proposed to slow down the process of developing the Environmental Code.

“This is happening in a hurry now. But maybe we need to discuss the code more and move the deadlines for its submission to parliament? After all, you first need to ask investors what risks they see. We are now seeing that the code is written from a position of restriction towards investors,” he summarised.

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