INTERFAX-KAZAKHSTAN KAZAKHSTAN MINING REPORT

N69 (298) 15.09.2014

Sepetmber 1– Sepetmber 15

N69 (298) 15.09.2014

OFFICIAL NEWS

  • Kazakh president orders parliament to give priority to subsoil bill
  • Mangistau authorities offer KZT 1.5-million reward to find cesium container
  • Atyrau region rescuers joined the missing cesium search
  • Lost container with cesium found in Kyzylorda region - ministry
  • Baiterek National Holding to invest 250 bln tenge in “industrialization map” projects by end-2014
  • Astana and Washington to team up against nuclear smuggling
  • Majilis approves ratification of ILO Convention on Promotional Framework for Occupational Safety and Health

STATISTICS

  • Inflation in Kazakhstan at 0.4% in August, 5.4% year to date
  • Kazakhstan's industrial prices decline 0.8% in August
  • Kazakhstan's gold, forex reservesup 9.9% in January-August
  • Kazakhstan's GDP rose 4.1% in eight months - Ministry of National Economy
  • Industrial production in Kazakhstan down 0.1% in Jan-Aug
  • Kazakhstan's foreign trade surplus increased 19.4% in seven months
  • Fixed capital investment up 5.7% in eight months in Kazakhstan
  • Kazakh import prices grow 13.5%, export prices fall 3.5% in July
  • Coal production in Kazakhstan declined 6.6% in January-August
  • Kazakhstan ups gold production 10.1% in Jan-Aug
  • Steel production in Kazakhstan up 20% in Jan-Aug
  • Kazakhstan's iron ore production down 0.2% in Jan-Aug

COMPANY NEWS

  • Spain’s Ampo S.Coop may launch a valve production line in Petropavlovsk
  • Polymetal estimates investments in Kyzyl development at $440-$640 mln
  • Kazakhstan Electrolysis Plant expects 19% decrease in aluminum output in 2014
  • Kazakhstan's president visits SSGPO and Evraz Caspian Steel
  • Polymetal finalizes acquisition of Kyzyl in Kazakhstan (Part 2)
  • Mining group including 10 iron ore deposits to be set up in Kostanai region
  • Bogatyr Komir completing construction of an equipment repair shop
  • Kazakh-Iranian copper mining project to see $50 million in initial investments

CIS NEWS

  • Polyus Gold EBITDA declines 6% to $393 mln in H1, beating forecast
  • Polymetal boosts EBITDA 30% in H1 to $310 mln, above forecast
  • Petropavlovsk EBITDA jumps 41% to $139 mln in H1, exceeds forecast
  • Silver Bear prepared to offer 30% of Mangazeisky project to Chinese investor - paper
  • Lenzoloto posts IFRS net losses of 123 mln rubles in H1
  • Rusal boosts Q2 EBITDA 26% to $220 mln, below forecast
  • Norilsk Nickel boosts EBITDA 8.6% in H1 to $2.5 bln, above forecast
  • Metalloinvest sold portion of Norilsk Nickel stake for $490 mln in May-July
  • UMMC to start exporting copper cathodes after export duty on copper canceled
  • Evraz posts EBITDA of $1.08 bln in H1, exceeding expectations
  • MMK posts EBITDA of $399 mln in Q2 under IFRS, beating forecast
  • Metalloinvest sees IFRS EBITDA fall 12% in H1 to $1.1 bln
  • TMK EBITDA at $190 mln in Q2, slightly below forecast
  • Kuzbass Fuel Company swings to IFRS net loss of 76 mln rubles in H1
  • Russian international reserves down $2.5 bln in week
  • Nordgold EBITDA jumps 42% to $141 mln in Q2, exceeds forecast
  • Centerra considers Kyrgyzstan's claims about KGC dividend payments unfounded
  • Chelyabinsk Zinc Plant swings to net profit of 925 mln rubles in H1
  • Rostec, Shenhua agree $10 bln in coal mining, power projects
  • Russian international reserves down $0.3 bln in week
  • Russia boosts gold production, concentrate exports 24% in 7M
  • Russia cuts aluminum exports 20%, copper up 5%, nickel - 0.6% in 7M
  • Russia boosts ferrous metal exports 1.15% in 7M
  • Ukraine cuts steel output 11% in 8M
  • Nesis ups stake in Polymetal to 19.86%
  • GV Gold, Kopy Goldfields targeting 40,000-60,000 oz gold per year at Krasny field
  • Manas Resources receives environmental approval to develop Shambesai field
  • Gold mining enterprise robbed in Kyrgyzstan
  • China to invest $30 mln in Tajik cathode plant
  • Severstal shareholders approve 2.14 ruble/share dividend for H1
  • Latvia selling Liepajas metalurgs to Ukrainian KVV Group for 107 mln euro
  • Mechel aiming to raise $2 bln-$3 bln in 2-3 yrs with asset sales – paper
IMPORTANT MACROECONOMIC INDICATORS OF kAZAKHSTAN
Inflation / Rate / Gold and currency reserve / FOREX rates / Country
August 2014 / Year-to-date / of refinancing / (Sept 1, 2014) / rating
0.4% / 5.4% / 5.5% per annum / National Bank - $27.743 bl
National Fund - $77.236 bl / KZT 181.95/$1(Sept 15) / S&P – BBB+
Moody’s – Ваа2
Fitch – BBВ+

OFFICIAL NEWS

Kazakh president orders parliament to give priority to subsoil bill

ASTANA. Sept 2 (Interfax-Kazakhstan) – Kazakh President Nursultan Nazarbayev instructs the parliament to give priority to the subsoil bill.

"First, you need to adopt amendments to the law on mineral resource management as these amendments are aimed to ease the license issue procedure, reduce administrative barriers and make the decision-making process more transparent", the president said when addressing the fourth session of the fifth parliament of Kazakhstan in Astana on Tuesday.

In February 2014, the government proposed 189 amendments to the subsoil legislation.

According to the amendments, the expertise requirements for license contracts will be reduced to 60%; the terms and conditions of the model contract optimized; the companies extracting solid mineral resources--excluding uranium--will now not have to get approval for changes in the production volumes.

The amendments also propose a new mechanism for awarding license contracts based on the “first come, first served” principle. In this case, the subsoil use fee will increase annually.

The bill also provides free access to geological information and excludes the feasibility study requirement from the mandatory project documentation.

Mangistau authorities offer KZT 1.5-million reward to find cesium container

ALMATY. Sept 4 (Interfax-Kazakhstan) – One and half million tenge reward is offered for missing container with radioactive cesium-137, said the Mangistau region Governor office.

70 National Guard servicemen "have combed the area from Shetpe to Oporny village in Beineu district, a distance of 300 km," said the regional administration.

The police go door to door explaining hazards to local residents and looking for new information in the case. Vehicles are being searched and all scrap metal outlets are subject to inspection.

A 50-60 kg container with cesium-137 fell out of the Kamaz truck on the way from Uralsk to Mangutsau region. The radioactive cargo was intended for scientific use. All emergency services in the area, including the police and military units are engaged in the search campaign. A toxic hazard warning has been issued to local residents.

Atyrau region rescuers joined the missing cesium search

AKTAU. Sept 4 (Interfax-Kazakhstan) – Nearly 250 people armed with metal detectors are looking for the missing container with cesium-137, deputy head of the regional emergency department Kazhimuhan Kospayev said at a Thursday press conference in Aktau.

According to him, the container might fall out of KAMAZ in the desert, 275 km from Aktau. "Roads there are in a very poor condition covered with a thick layer of road dust and sand," he said.

"Just in case, we have engaged Atyrau region search teams as well," he added.

Director of BN-350 Reactor Decommission at MAEC Kazatomprom Yuri Shirokobokov said at a press conference that Kazpromgeofizika was transporting cesium and the Kamaz truck had three containers fastened to the sides of the truck body.

He specified that the container has a double capsule with the active core having 6 mm to 6.5 mm in diameter. In other words, cesium weight in the capsule is measured in grams.

"If the capsule is cracked open, the radiation willl exceed norm 8,000 times. But opening it without special tools it's not easy task," added Shirokobokov.

One and half million tenge reward was offered for the missing container with radioactive cesium-137. All emergency services in the area, including the police and military units are engaged in the search campaign. A 50-60 kg container with cesium-137 presumably fell out of the Kamaz truck on the way from Uralsk to Mangutsau region on August 28.

Lost container with cesium found in Kyzylorda region - ministry

ASTANA. Sept 8 (Interfax) - A container carrying cesium-137, which was lost in Kazakhstan's Mangistau region, has been found in the Kyzylorda region, the republic's Interior Ministry said on Saturday.

In the early hours of September 6, police received a call from a resident of the city of Kyzylorda who said that a Kamaz vehicle was carrying the lost radioactive isotope of cesium, the spokesperson said.

"As soon as the report came in, the personnel in the Kyzylorda and nearby regions were immediately instructed to stop the vehicle. As a result of their concerted efforts, police officers stopped the Kamaz vehicle with a driver and passenger and the lost capsule in the trunk, on the turn into the town of Baigekum, Shieli District, Kyzylorda region, at 2 a.m. this morning," the Interior Ministry said.

The driver and the passenger of the vehicle have been brought to the Shieli District Police Department and are now being questioned.

It was reported that a container carrying cesium-137, which was 30 centimeters high, had 20 centimeters in diameter and weighed about 50-60 kilograms, fell out of the Kamaz vehicle on August 28 on the Sai-Otes-Shetpe road in the Mangistau region.

The search for the dangerous object involved all regional emergency agencies, including the police, the emergency situations ministry and the army. The authorities of the Mangistau region promised a 1.5-million tenge award (the current exchange rate: 182 tenge/$1) to anyone who finds the container with the cesium.

Baiterek National Holding to invest 250 bln tenge in “industrialization map” projects by end-2014

ASTANA. Sept 8 (Interfax-Kazakshtan) – National Management Holding Baiterek will finance “industrialization map” projects to the total amount of 250 billion tenge by the end of this year, Baiterek says in a press release.

Current FOREX rate is 182/$1.

“By the end of 2015, Baiterek will finance projects to the total amount of about 250 billion tenge, including an expansion project at the carmaker Saryarka Avtoprom, a project for construction of a high-carbon ferrochrome shop at the Aktobe ferroalloy plant, a zinc export project at Kazzinc and others,” the press release says.

In the seven months of the current year, the Development Bank of Kazakhstan supported 16 projects by lending a total of 341.5 billion tenge and made a decision to finance another six projects with 44.5 billion tenge worth of loans.

The Investment Fund of Kazakhstan is mulling over 16 rehabilitation projects in 2014-2015. The Fund expects a return-on-investment of 3.1 billion tenge in 2015, according to the press release.

In January-July 2014, the enterprises that were supported by the National Agency for Technical Development produced 5.45 billion tenge worth of goods. The Agency also provided 128 million tenge in innovation grants.

National Management Holding Baiterek was organized in May 2013 to manage the stakes in the national institutes of development, the national companies and other legal entities. Baiterek either owns such stakes or manages them on behalf of the other stakeholders.

Baiterek manages the Development Bank of Kazakhstan (DBK), Investment Fund of Kazakhstan, DAMU Entrepreneurship Development Fund, Kazyna Capital Management, Baiterek Development JSC, Center for Management of Public Private Partnership Projects LLP, the National Agency for Technical Development, Zhilstroisberbank of Kazakhstan (Housing Construction Savings Bank), Mortgage Company of Kazakhstan, Mortgage Loan Guarantee Fund of Kazakhstan and KazExportGrant JSC.

Astana and Washington to team up against nuclear smuggling

ASTANA. Sept 10 (Interfax-Kazakhstan) – Kazakhstan and the United States have reached agreement to step up effort in the fight against nuclear and radiological material smuggling.

“A multiagency delegation of U.S. officials met with their Republic of Kazakhstan counterparts in Astana on September 8-9 to advance U.S.-Kazakhstani mutual efforts to counter nuclear smuggling,” the US Embassy in Kazakhstan says in a press release.

The meeting provided an opportunity to deepen our ongoing bilateral partnership in this area under the U.S.-Kazakhstan Communiquй on Intentions to Improve Kazakhstan’s Capabilities to Combat Nuclear Smuggling, which the two countries signed in 2006, according to the press release.

During the meeting in Astana, the sides agreed to cooperate more closely in support of Kazakhstan’s effort to develop a training curriculum on illicit trafficking at the Nuclear Security Training Center, an initiative that President Nazarbayev announced at the 2012 Nuclear Security Summit in Seoul.

“Specifically, U.S. and Kazakhstani officials discussed how to use ongoing and proposed training opportunities at the Center to strengthen national competencies in the areas of nuclear forensics, radiation detection, and law enforcement investigations. In addition, our governments reviewed overall progress in implementing the 2006 Communiquй across a broad range of cooperative activities to work with Kazakhstan to prevent, detect, and respond to nuclear and radiological material trafficking incidents,” the press release says.

Majilis approves ratification of ILO Convention on Promotional Framework for Occupational Safety and Health

ASTANA. Sept 10 (Interfax-Kazakhstan) – Kazakhstan's Majilis, Lower Chamber of Parliament on Wednesday approved ratification of the Convention on the Promotional Framework for Occupational Safety and Health (No. 187).

According to the Minister of Health and Social Development Tamara Duysenova, ILO Convention was ratified by 25 member countries including Russia and Moldova.

According to statistics, the number of employees working in hazardous conditions in Kazakhstan, at the beginning of 2014 amounted to 376,000 or one fifth of the total employment. High noise level poses danger to 40% of employees (153,800), while high gas content and dust in the working area affects more than 35% (132,900).

"Currently, the Kazakh government is working on the transition from the compensation OSH management system to a modern professional risk management to implement a preventive approach to workers' health risks and cut costs associated with hazardous working conditions. Therefore, it is suggested to ratify ILO Convention 187," said Duysenova.

Convention No 187 was adopted at the General Conference of the International Labor Organization (ILO) on June 15, 2006 in Geneva.

Convention No. 187 calls for ratifying member States to take action to progressively achieve a safe and healthy working environment and commit themselves to continuous improvement of occupational safety and health by means of a national policy, a national system and a national program aimed at the prevention of occupational injuries, diseases and deaths, through tripartism and social dialogue.

STATISTICS

Inflation in Kazakhstan at 0.4% in August, 5.4% year to date

ALMATY. Sept 2 (Interfax-Kazakhstan) – In August the inflation level in Kazakhstan stood at 0.4%, the Kazakh State Agency for Statistics said.

In August 2014, the prices for food products decreased by 0.1%, for non-food items rose by 1.1% and for services by 0.4%.

The annual inflation rate through the eight months ended August 31, 2014 is at 5.4%, with prices for food stuffs climbing by 5.3%, non-food products by 6.2% and services by 4.7%.

Kazakhstan's industrial prices decline 0.8% in August

ASTANA. Sept 2 (Interfax-Kazakhstan) - The prices for industrial products and services decreased 0.8% in August 2014 compared to July 2014 and rose 15.4% compared to August 2013, the State Agency for Statistics reported.

In August 2014 the prices for industrial products decreased 0.8% from a month earlier or an increase of 16% compared to August 2013; industrial service prices remained flat compared to the previous month or grew by 7.9% compared to August 2013.

Last month the prices in the mining sector went down by 1.8% while the prices in the manufacturing grew by 1.8%.

In the reporting month the prices for metal ores decreased by 3.1%, crude oil and natural gas by 1.9% while the precious and non-ferrous metals rose by 4.7% in price, paper and paper products by 4.2%, coke and petroleum products by 2.4% and tobacco products by 2.3%.

Kazakhstan's gold, forex reserves up 9.9% in January-August

ALMATY. Sept 8 (Interfax-Kazakhstan) - Kazakhstan's gold and foreign currency reserves, including the Kazakh National Bank's gross reserves and funds accumulated in Kazakhstan's National Fund, rose to $104.979 billion as of the end of August 2014, up 1.2%in the month and 9.9% in January-August, the National Bank said in a statement.

Assets of the National Fund grew 0.62% in July to $77.236 billion (up 9.1% in 8 months).

In August 2014, gross international reserves of the National Bank rose 2.76% to $27.743 billion (up 12.25% in 8 months) and the bank's net international reserves grew 2.85% to $27.106 billion, up 12.15% from the beginning of the year.

Currency reserves fell 1.12% in August to $20.224 billion (up 5.53% in 78M), while gold assets rose 14.91% to $7.519 billion (up 35.45% in 8M).

Kazakhstan's GDP rose 4.1% in eight months - Ministry of National Economy

ASTANA. Sept 10 (Interfax-Kazakhstan) – Kazakhstan's GDP in January-August 2014 increased by 4.1%.

"GDP growth according to the estimates made 4.1% in eight months," said the Minister of National Economy Erbolat Dossaev at a Wednesday briefing in Astana.

"The index of physical volume of industrial production was 0.1% down, agriculture growth was 2.5%, construction (4.7% up), trade (9.4% up), transport (7% up) and communications (9.3% up), " Dosayev said.

The investment in fixed assets increased by 5.7%.

"Inflation over the past month was 0.4% and in annual terms amounted to 5.4% in eigth months," said the Minister.

The Kazakh government expects real GDP growth in 2014 at 6%.

Industrial production in Kazakhstan down 0.1% in Jan-Aug

ALMATY. Sept 12 (Interfax-Kazakhstan) – In January-August 2014 the industrial output in Kazakhstan edged down 0.1% year-on-year, the State Statistics Agency said.

In the reporting period the mining industry shrank by 0.1%, processing industry declined by 0.4%, power, electricity, gas and steam supplies increased by 1.7%, and water supplies reduced by 4.2%.

According to the statistics, industrial output grew in nine regions of the country in January-August 2014. A decrease in industrial production was reported in the Aktobe, Atyrau, Kyzylorda, Pavlodar regions and in Astana and Almaty.

The industrial production in Kazakhstan decreased 0.4% in January-June 2014 and rose 2.3% in 2013.

Kazakhstan's foreign trade surplus increased 19.4% in seven months

ALMATY. Sept 12 (Interfax-Kazakhstan) – In January-July 2014, the foreign trade surplus of Kazakhstan totaled $25.2 billion, or an increase of 19.4% compared with the same period of 2013, the State Agency for Statistics reported.

In the reporting period, the country's foreign trade turnover decreased by 7.7% year-on-year to $71 billion, including exports of $48.1 billion (down 3.6%) and imports of $22.9 billion (down 15.3%).

In the reporting period, export operations with the Customs Union amounted to $2.915 billion (down 21%), imports to $7.825 billion (down 22.9%).

The main buyers of Kazakhstan-made products were Italy (22.8% of all exports), China (13.3%), and the Netherlands (11.4%). The main exporters to Kazakhstan were Russia (32.7% of all Kazakhstan’s imports in the reporting period), China (17.7%), Germany (5.8%).