Yelge Qaitaru Foundation: returning JSC “Kazakhmys” and “KAZ Minerals” to the ownership of the Republic of Kazakhstan

The his­to­ry of the cop­per indus­try in Kazakhstan is more than 100 years old and it was cre­at­ed by the efforts of many gen­er­a­tions of our compatriots.

The first min­ing oper­a­tions in Kazakhstan began in 1913. They were car­ried out at the Zhezkazgan cop­per deposit by the Spasskoye JSC, head­ed by the Englishman Leslie Urquhart. But the real indus­tri­al devel­op­ment of the region began dur­ing the years of the first five-year plans and reached its peak by the end of the 1930s, when the еso-called “Big Dzhezkazgan” was launched — quar­ries, mines and the Dzhezkazgan cop­per plant.

In the 1950s, this com­plex of enter­pris­es was merged into the Dzhezkazgan Mining and Metallurgical Combine, at the facil­i­ties of which at that time more than 90% of all cop­per in the USSR was pro­duced. In 1987, the plant was trans­formed into research and pro­duc­tion asso­ci­a­tion “Dzhezkazgantsvetmet”, and in 1992 — into JSC “Zhezkazgantsvetmet”, which lat­er became the cor­po­ra­tion named “Kazakhmys”.

The cop­per empire includ­ed 18 mines, a net­work of min­ing and pro­cess­ing plants, cop­per smelters and four coal-fired pow­er plants. The lat­ter account­ed for 20% of all nation­al elec­tric­i­ty generation.

The trans­for­ma­tion into a joint-stock com­pa­ny launched the pri­va­ti­za­tion process. But the pri­va­ti­za­tion was non-trans­par­ent and began in 1995 through the trans­fer of the com­plex to the man­age­ment of Samsung C&T Deutschland GmbH, which end­ed in a series of manip­u­la­tions, which even­tu­al­ly led the emer­gence of new own­ers, the receipt of sig­nif­i­cant amounts from which to the bud­get of the Republic of Kazakhstan is unknown.

The new invest­ment pro­gram adopt­ed by “Kazakhmys” in 2010, financed by the China Development Bank, rad­i­cal­ly changed the state of affairs in the cor­po­ra­tion itself. Instead of extract­ing ore from well-explored deposits and then pro­duc­ing qual­i­ty cop­per, which was sup­plied to the world mar­ket, the com­pa­ny began devel­op­ing quar­ries and sell con­cen­trate to China.

It rais­es the ques­tion on what con­di­tions the State Fund “Samruk-Kazyna” par­tic­i­pates in this loan. Does this mean that the Samruk-Kazyna Fund and the Government of the Republic of Kazakhstan are respon­si­ble for the loan received by the pri­vate company?

The China Development Bank has allo­cat­ed more than $4 bil­lion to devel­op two large cop­per deposits, Aktogay and Bozshakol. The enriched ore mined from new deposits was to be sent to Chinese cop­per smelters. Thus, this pro­gram led to the accel­er­at­ed devel­op­ment of the raw mate­r­i­al base for Chinese industry.

Most of the ore mined from these two deposits, as expect­ed, is sent to China in the form of con­cen­trate pro­duced at min­ing and pro­cess­ing plants. And only a small part will go to the Balkhash cop­per smelter, where it is melt­ed into cath­ode cop­per under tolling conditions.

On aver­age, over a five-year peri­od — from 2008 to 2012 — sales to China already pro­vid­ed about 45% of all income of “Kazakhmys Mining” — the met­al­lur­gi­cal divi­sion of “Kazakhmys” at that time. And in 2012, about 80% of all “Kazakhmys” cop­per was export­ed to China.

We believe that these cir­cum­stances turn our coun­try into a raw mate­r­i­al appendage of a for­eign econ­o­my, lead­ing to a loss of income from high­er redis­tri­b­u­tion and com­pe­ten­cies of the engi­neer­ing and tech­ni­cal per­son­nel of the republic.

Moreover, from 2008 to 2010 the state paid in var­i­ous ways $4.3 bil­lion for 26.3% of the shares of JSC “Kazakhmys” dur­ing the buy­back. On what basis was this amount paid? Simple arith­metics shows that at the time of the buy­back, the com­pa­ny was val­ued at over $16 bil­lion. Which of the cur­rent share­hold­ers of the com­pa­ny (V. Kim, E. Ogay, O. Novachuk) can pro­vide evi­dence of pay­ment to the bud­get of the Republic of Kazakhstan of at least some amount of mon­ey for the acqui­si­tion of our nation­al trea­sure, which is “Kazakhmys”?

We ask you to check the legal­i­ty of the pri­va­ti­za­tion of all enter­pris­es of the coun­try’s cop­per indus­try, assess the degree of dam­age to the inter­ests of the Republic of Kazakhstan and bring the per­pe­tra­tors to justice.

Considering that the cop­per indus­try is one of the key areas of the glob­al econ­o­my, we ask you to con­sid­er the issue of return­ing JSC “Kazakhmys” and “KAZ Minerals” to the own­er­ship of the Republic of Kazakhstan and announce the com­po­si­tion of the real own­ers of these companies.

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