* Miners deterred by bureaucracy, lack of clarity
* Exploration required to replace depleted reserves
* Kazakhstan highly prospective in copper, gold, zinc
By Robin Paxton
ASTANA, April 19 Mining companies active in
Kazakhstan urged authorities on Thursday to remove bureaucratic
hurdles to investment in order to encourage overdue exploration
of prospective metals deposits in the Central Asian state.
Though extensively mapped by Soviet geologists, Kazakhstan
must act quickly to uncover new deposits of copper, gold and
other metals that will replace fast-depleting existing reserves,
several mining executives and consultants told a conference.
"Exploration is a thriving business around the world, but it
is not thriving in this region," said David Pearce, general
director of SRK Consulting. "Companies need to have the
confidence that, if they do the exploration, they can develop
the mine and achieve the economic reward."
Kazakhstan's uranium reserves are second only to
Australia's. The former Soviet republic, Central Asia's biggest
economy, also holds the world's largest chromium reserves and
substantial copper, zinc, iron ore and bauxite deposits.
Despite its prospectivity, Kazakhstan receives less than 1
percent of global investment in metals exploration, several
officials at the 3rd annual MINEX Central Asia forum said.
Companies including global mining giant Rio Tinto
and London-listed ENRC have grown frustrated at
red tape encountered by miners seeking to establish a presence
in the vast steppe nation of 16.7 million people.
"A lack of transparency in the tender process means that
foreign investors do not feel confident they can get a fair
hearing," said Chris Welton, Rio Tinto's general manager for
exploration in Central Asia.
"The decision on awarding tenders is driven solely on the
signing bonus and the social contribution, with no consideration
of the technical competence of the winner or the winner's
ability to develop that project," he said.
"Investors are reticent to present their ideas as the chance
of them winning the subsequent tender are slim."
First Deputy Prime Minister Serik Akhmetov said the
government had begun work to simplify the procedure of granting
mining exploration licences.
"It's important to create the optimum conditions for
attracting investment, technology and opening up new mineral
deposits that can help replenish depleting reserves and create
the economic stimulus for development," he told the forum.
Central Asia Metals is one of relatively few junior
miners in Kazakhstan to have taken a project through to
production. The company is producing copper extracted from waste
dumps from a Soviet-era mine near the central city of Balkhash.
"I built a project in 18 months," said Chief Executive Nick
Clarke. "It can be done, but it wasn't done without a lot of
heartache and a lot of bureaucracy. We've achieved an awful lot,
but we could do with more help."
Central Asia Metals built its Kounrad project within budget
of $47 million and is ramping up copper cathode output to 10,000
tonnes per year. The company has plans to expand output further.
"There has to be, from our perspective, less bureaucracy,"
said Clarke. "Time costs money and, in terms of companies like
ours, that's investors' money. It's inefficient for us to spend
too much time on lengthy bureaucratic delays."
Another London-listed miner, Frontier Mining, aims
to be producing 30,000 tonnes a year of copper from three Kazakh
deposits by 2016, company president Yerlan Sagadiyev said.
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.
An official from ENRC, which has most of its assets in
Kazakhstan, said it had been easier for the company to secure
licences in Brazil and the Democratic Republic of Congo than in
its home country.
"It takes three months, without any problems, to receive
state permission to open up new deposits in Brazil or the
(Democratic Republic of) Congo," said Nariman Aripov, director
of ENRC Kazakhstan's mining department.
"In Kazakhstan, where we have been working for many years,
there's a moratorium and we are not permitted to do this."
As the national mining champion and a unit of the sovereign
wealth fund, state-owned Tau-Ken Samruk is exempt from the
current moratorium on new licences.
Rio Tinto, its potential partner in a copper exploration
project in northern Kazakhstan, hopes an imminent deal with the
state company could prove the catalyst for foreign investment in
Aibek Izhanov, chief geologist for Tau-Ken Samruk, told
reporters initial investment in the proposed project to explore
for copper in Kostanai region, near the Russian border, could
total about $100 million.
"I strongly believe that foreign investors will be key in
developing the mining sector in Kazakhstan," Rio Tinto's Welton
said. "A few simple changes can be implemented to make this one
of the leading mining centres in the world."