Scroll Top

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.

Related Posts