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Books on Kazakstan
REPUBLICAN REFERENCE
Area (sq.km)
2,717,300
Population
15,143,704
Principal
ethnic groups
Kazaks 44.3%
Russians 35.8%
Ukrainians 5.1%
Germans 3.6%
and many others
Capital
Astana
(formerly Akmola)
Currency
Tenge
President
Nursultan Nazarbayev
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Update No: 300 - (01/01/06)
Kazak president gains third term as observers attack ballot
methods
Nursultan Nazarbayev secured a third term as president of Kazakstan with 91 per
cent of the vote, in the latest election in a former Soviet state to be
criticised by observers as falling short of international standards. The result
gives an indication that the wave of pre-democracy revolutions that swept
through Georgia, Ukraine and Kyrgyzstan might be fizzling out, after the recent
disputed parliamentary poll in Azerbaijan, but it is still too early to tell for
sure. For various reasons, Kazakstan is a special case.
Preliminary results of the election gave Nazarbayev's main opposition
challenger, Zharmakhan Tuyakbai, only 6.64 per cent, and a second opposition
candidate, Aikhan Baimenov, a mere 1.65 per cent.
Tuyakbai denounced "unprecedented violations of the constitution and
electoral laws" and suggested the vote showed that Kazakstan was
"turning from an authoritarian regime into a totalitarian one." His
campaign team pledged a legal challenge, and said it had sought official
permission to hold demonstrations once a temporary ban on protests expired on
December 14th.
An international observer mission led by the Organisation fro Security and
Cooperation in Europe (OSCE) found "some improvements" over Kazak
parliamentary polls last year, where the opposition won only one of 77 seats.
But it said the election did not meet a number of international standards,
citing cases of multiple voting, ballot box stuffing and tampering with results.
Those assessments contrasted sharply with Nazarbayev's earlier pledges that the
election would be fair, and his declaration recently that it was taking place in
"unprecedented democratic conditions." He said Kazaks had voted for
"calmness and stability." He added that promise political reforms
would be his third-term priority.
The 90 per cent-plus vote puts the Kazak leader in the same bracket numerically
at least as his autocratic central Asian neighbours, Saparmurat Niyazov of
Turkmenistan and Islam Karimov of Uzbekistan. One European diplomat in Almaty,
Kazakstan's biggest city, warned that the result and the observers' verdict
could complicate Nazarbayev's ambitions to chair the OSCE in 2009.
Nazarbayev's "soft authoritarian" methods, however, along with
fast-growing output from the country's vast oil and gas reserves, have delivered
higher living standards and made Kazakstan the most advanced central Asian
state.
Vladimir Putin, Russia's president, was the first foreign leader to congratulate
Nazarbayev in a phone call. Russia's observer mission was one of several to
declare the elections democratic; given its provenance, a dubious accolade.
Profile of a benevolent despot and his clan
Nazarbayev, who is 65 years old, had humble beginnings, being a son of
shepherds. A onetime steel worker, he earned the reputation of a reformer in
Mikhail Gorbachev's Soviet Union. But he was also always determined and
ruthless, those who know him say. "Even at university, when we'd all go off
to the disco, he would stay behind working", recalls demographer Makash
Tatimov, who studied with Nazarbayev in Ukraine. He assumed the presidency in
1989, two years before independence.
A Western diplomat who asked not to be identified said: "He's intelligent,
certainly, but mercilessly tough."
The thirst to get ahead is evidently shared by the rest of the first family.
Nazarbayev's eldest daughter, Dariga, is an opera singer who owned a media
empire before starting her own political party. She is married to the deputy
foreign minister and has long been rumoured to be preparing to succeed her
father.
Another daughter, Dinara, controls a bank, while her husband, Timur Kulibayev,
was until recently deputy chairman of the state-owned energy company Kazmunaigaz
and now owns 95% of the Halyk Bank, the country's 3rd largest.
The third daughter, Aliya, is a luxury property developer and divorced from the
son of neighbouring Kyrgyzstan's former president, Askar Akayev, toppled in a
revolution last March.
Monopolizing politics by strong leaders is common across the ex-Soviet Union.
Neighbouring Turkmenistan has a president for life. Uzbekistan's President Islam
Karimov allegedly ordered a massacre last May to restore control over a
rebellious city. And across the Caspian Sea, Azerbaijan's President Ilham Aliyev,
son of the former leader, is accused of rigging recent parliamentary elections.
But even critics admit that Nazarbayev is genuinely popular and has been canny
in putting Kazakstan on the economic and diplomatic map. "He is probably
one of the most pragmatic leaders in the former USSR. He's not emotional. He
knows what the country needs", said Dosym Satpayev, director of the Risk
Assessment Group.
According to Satpayev, Nazarbayev's ultimate goal is to convert the country's
oil wealth into the kind of political clout that will make Kazakstan not only
regional leader but a force to be reckoned with in the West. "They push the
message the whole time that Kazakstan is not Central Asian but Eurasian".
Western partners, such as the United States, hope that helping Nazarbayev will
eventually steer him toward democracy. "The United States has started to
divide Central Asia into soft and hard authoritarian regimes and they think that
enlightened autocracies can be changed", according to Kazak political
analyst Eduard Poletayev.
****
The following article reveals quite how rapidly things are developing in
Kazakstan;-
Openness to the West lifting Kazak banks
By Christopher Pala in The International Herald Tribune
This vast, sparsely populated country rooted in a nomadic culture might seem an
unlikely place for a booming banking industry.
But with the economy growing by nearly 10 per cent a year for the past six
years, Kazakstan's banks are posting strong profits and spectacular growth
rates. This is attracting increasing attention from European banks wanting a
stake in a country whose oil exports are expected to triple over the next 15
years.
Kazakstan did not sink into poverty upon gaining independence 14 years ago, as
did most ex-Soviet republics. Instead it lured Western oil companies to invest
billions of dollars in the huge but hard-to-reach deposits of the north Caspian
basin that had been too challenging for Soviet oilmen, endowing the government
with a growing flow of cash that has been complemented by large exports of
metals.
As a result, the banking sector here has nearly attained the level of Eastern
Europe's, without the outside help that East European governments received from
the European Union, and without the takeovers of local institutions by West
European banks that have transformed the East European financial landscape.
Corruption remains a serious problem in Kazakstan - Transparency International's
index of 158 countries perceived as the most corrupt lists it tied for 107th -
but analysts say that the banking sector has remained remarkably transparent.
"Banks are well-managed and well- regulated," said Pedro Rodriguez,
the World Bank's chief economist for Kazakstan. But, he warned, "this
spectacular growth rate is inherently destabilizing and the banks will need to
be more closely inspected."
According to some bankers, local lenders will also eventually need access to
foreign capital if they are to sustain the economic boom by supplying an
expected increase in demand for loans. In order to do so, they will either have
to raise money by selling shares or acquire strategic partners.
The shareholders of local banks "might have deep enough pockets for today,
but given the banks' growth rates, I wouldn't expect that situation to last
forever," said Dan Connelly, the head of Citibank Kazakstan, which is not
considering a local takeover and deals only in corporate finance.
Timur Issatayev, head of ATF Bank, the country's fourth-largest lender, called
the foreign takeover process "inevitable." He said that his bank might
be sold someday, but that no deals were imminent.
Jean Lemierre, president of the European Bank for Reconstruction and
Development, the biggest non-oil investor in Kazakstan, said in an interview
that he agreed foreign takeovers were inevitable, but that Kazakstan's
"well-managed economy" might allow local banks to grow alongside
foreign ones by offering their shares to the public.
Back in the chaotic early 1990s, banks sprouted like mushrooms. At that time,
President Nursultan Nazarbayev, who has ruled Kazakstan with a steady if
increasingly autocratic hand since 1989, appointed and backed a team of eager
young reformers to the country's fledgling central bank, forging a financial
sector that has become the envy of Central Asia.
A common measure of a country's banking sector is its ratio of assets to gross
domestic product. "Our ratio is 55 per cent and growing fast," said
Grigory Marchenko, a widely respected former central bank governor who
implemented many of the reforms. "Poland's ratio is 60 per cent and it's
quite possible we will overtake them in a couple of years."
Kazakstan's banking sector has been expanding rapidly, with assets growing about
40 per cent a year, and has been extremely profitable, which is why there are
few sellers, despite an abundance of potential foreign buyers. As far as is
publicly known, there is just one seller, and it is offering only a blocking
share: 25 per cent of its stock plus one share.
That bank is Halyk Bank, the country's third-largest. Descended from the old
Russian national savings bank, Sberbank, it is Kazakstan's biggest retail
lender, with 540 branches and the equivalent of US$4.1 billion in assets.
Halyk is one of the most profitable of the country's top five banks, with US$100
million in profit last year and a return on capital of 89 per cent, said
Marchenko, the former central bank governor, who has become Halyk's chief
executive.
He wants a European strategic partner to further streamline its operations,
bringing in new products and up-to-date information technology systems.
But while his negotiations with potential partners have gone on for more than a
year, so far they have failed to bridge a major difference in goals: The foreign
banks want an option to buy a controlling stake in Halyk within a specified
period, which is unacceptable to the shareholder who controls 94.6 per-cent of
the stock, Marchenko said.
That shareholder is Timur Kulibayev, a son-in-law of Nazarbayev, who until
recently ran KazMunaiGaz, the state oil company. Kulibayev is considered one of
the most powerful and richest men in Kazakstan.
"Mr. Kulibayev does not interfere in the management, and all the dividends
are added to the bank's capital, which is now growing even faster than our
assets, and they grew by 57 per cent last year," said Marchenko. "I
can't complain."
While he declines to give specifics on the negotiations, other bankers suggest
that the buyers may simply have to accept that no bank worth buying is willing
to give up control quite yet, and may have to settle for what many banks are
settling for in China, with stakes as small as 10 per cent.
BNP Paribas, the French bank, is believed to be the front-runner in the
negotiations with Halyk, according to bankers. A BNP Paribas spokeswoman in
Paris, Carine Lauru, said the bank does not comment on possible takeover
negotiations.
Marchenko declined to name the bank he believed most likely to close the deal,
other than to say it was European.
"There are nine European banks that have plans to expand their business
here in Kazakstan, of which only half are really serious," he said.
"I've talked to all of them. Of these, two or three will do it."
Once a local bank starts offering new products and gets its information
technology systems to European levels, "that would definitely change the
competitive situation," he said.
But Magzhan Auezov, a managing director of Kazkommertsbank, the country's
largest lender, is not so sure.
"Being controlled from a European capital may make them less flexible and
lower their risk appetite," he said. "That's something we'll be
watching."
Jurgen Rigterink, chairman of ABN AMRO Bank Kazakstan, said: "If Halyk
sells, then I would expect that one or two others would be sold too."
Since neither of the top two banks, Kazkommertsbank and Bank Turan Alem, are
looking for foreign partners at the moment, the likeliest targets would be a
half-dozen second-tier banks with networks of 20 branches or so, according to
Rigterink and others. But so far, none of these banks are publicly expressing
any interest in selling.
"It's a good time to be a banker," said Auezov of Kazkommertsbank.
As for Marchenko, he said he was in no hurry. "Each month that negotiations
go on, the value of the bank goes up," he said.
Opposition leader killed by three shots was a suicide, police claim
From Jeremy Page in Almaty
The wife of a leading opposition figure in Kazakstan found him sprawled in a
pool of blood in the billiard room of his villa in Almaty.
Zamenbek Nurkadilov had been shot twice in the chest, piercing his heart, and
once at close range in the head, investigators say. By his side lay a cushion
with two bullet holes in it. Yet three weeks on, police in the city are still
treating the case as a suspected suicide. Which precisely describes the
uselessness of the police as guardians of public order. It can safely be
predicted that no convictions will follow this potential murder.
"It's unbelievable," his wife, the popular singer Makpal Zhunusova,
told The Times. "How does a man shoot himself in the heart, then in the
head, and then throw himself on the floor?"
That is just one of many awkward questions being asked of the Government in this
former Soviet Central Asian nation before Sunday's presidential election.
The Opposition has linked Mr Nurkadilov's death to his criticism of President
Nazarbayev, who has ruled since 1989 and is standing for a third seven-year
term.
Mr Nurkadilov was the Emergencies Minister and a close friend of Mr Nazarbayev
until he switched sides last year and became his harshest critic. He once
compared the President to Nicolae Ceausescu, the late Romanian dictator.
"I see no other explanation for his death other than a political one,"
said Zharmakhan Tuyakbai, 58, a former Speaker of parliament who was the main
opposition candidate. "It is dangerous to get involved in politics in
Kazakstan."
Critics accuse the President of restricting his four opponents' access to the
media, harassing their supporters, closing opposition newspapers and plotting to
falsify poll results.
But even opposition leaders see little hope of staging a revolution such as
those that engulfed Georgia, Ukraine and Kyrgyzstan in the past two years. Mr
Nazarbayev has vowed to crush any uprising and a new law bans protests before
the election result is confirmed.
The West appears as reluctant to encourage unrest here as it was in Azerbaijan
after its flawed parliamentary elections. Western companies have invested
billions of dollars in Kazakstan to secure access to oil supplies that will be
shipped to Azerbaijan and then, via a new pipeline, to the Mediterranean.
Kazakstan, the only Central Asian nation with troops in Iraq, is also of
increasing strategic importance to the United States since it fell out with
Uzbekistan over the massacre of anti-government protesters.
Nevertheless, the Kazak Government's handling of Mr Nurkadilov's death and the
election are raising grave questions about this emerging energy giant's future.
The West has long regarded Mr Nazarbayev as a "soft", authoritarian
leader who would eventually introduce democratic reforms. On a visit there
recently, Condoleezza Rice, the US Secretary of State, said that Kazakstan
"has a chance to be a real leader in Central Asia on both economic and
political reform".
Mr Nazarbayev has played to those expectations. "I want Kazaks to be
rich," he told a rally. At the same time, he promised "a real
modernisation of politics" and an "attack on corruption".
He is also in the running to take over the chairmanship of the Organisation for
Security and Co-operation in Europe, which monitors elections in the former
Soviet Union, in 2009. But that possibility will be scuppered if the OSCE
criticises Sunday's poll, as happened. Western officials fear that Mr Nazarbayev
will react by abandoning democratic reforms altogether and moving closer to
Russia and China.
He has pointedly ignored criticism of last year's parliamentary elections, which
packed the legislature with his friends and relatives.
He is widely thought to be grooming his daughter, Dariga, a former opera singer,
to take over the presidency. She ran a media empire before founding her own
party last year. Another daughter, Dinara, controls Halyk (People's) Bank, where
the election commission holds the campaign accounts of presidential candidates.
Opposition leaders accuse the Nazarbayev family of enriching themselves at the
country's expense. They cite the trial in New York of James Giffen, a US
businessman, accused of giving Mr Nazarbayev and his former Oil Minister US$78
million (about £45 million) in bribes in the 1990s. But Mr Nazarbayev has not
allowed state media to air details of the case and is expected to clamp down
further after the trial resumes in January.
Some opposition figures see a link between the case and the killing of Mr
Nurkadilov, who had founded an anti-corruption organisation.
The police's handling of the Nurkadilov case and the state media's biased
coverage suggest at best incompetence and at worst a cover-up. "I know my
husband was afraid," said Mrs Nurkadilova, who has a three-year-old
daughter. "Now I'm afraid that if I say something, they will kill me."
Spin-doctors called in to take on Borat
By Jeremy Page
Kazaks, the tour guide said without a hint of a smile, do not drink fermented
horse urine. Nor do they keep their wives in cages, punch goats or make
homosexuals wear blue hats.
Borat Sagdiyev, the spoof Kazak reporter portrayed by Sacha Baron Cohen,
apparently does not have many fans here. So insulted was the Government when
Borat hosted the MTV awards last month that it threatened to sue Mr Cohen, a
British comedian. Now it is launching a public relations offensive to blow apart
Borat's myths. It has hired at least two Western PR companies and this week
published a four-page advertisement in The New York Times.
There is plenty to brag about. In Soviet times Kazakstan was a backwater of
desert and grassland used for testing nuclear bombs and launching space rockets;
but since the Soviet collapse this country of 15 million people has emerged as
the dominant power in Central Asia and is poised to become one of the world's
top ten oil producers.
Its economy has grown annually by 10 per cent since 2001. Last year more Kazaks
many of whom are ethnic Slavs returned than left, making it the first former
Soviet state to reverse a post-Soviet brain drain. This month it will begin its
own space programme by sending a communications satellite into orbit. There are
even a small number of Borat fans among the Westernised middle class.
Kazakstan does have some features that raise Western eyebrows. Kazaks drink
fermented mare's milk, eat horse meat and play bushkazi, which involves
horseback teams fighting over a dead sheep - the origins of polo.
The President spent US$500 million (£289 million) building a capital, Astana,
in grasslands where temperatures reach 40C (105F) in summer and -40 in winter.
Kazakstan is, by regional standards, a beacon of economic and political
stability - even if its efforts to take on Borat seem only to backfire.
This week he responded in character to the Government's threat. "I have no
connection with Mr Cohen and fully support my Government's position to sue this
Jew," he said. "Since the 2003 reforms, Kazakstan is as civilised as
any other country in the world. Women can now travel on inside of bus,
homosexuals no longer have to wear blue hats and age of consent has been raised
to eight years old."
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ENERGY
Kazakstan vows to provide oil for Odessa-Brody
Kazak President, Nursultan Nazarbayev, on November 18th said that "there
will be no problem" with Kazakstan providing sufficient oil for the
Odessa-Brody pipeline or in securing its delivery to Ukraine, New Europe
reported.
Nazarbayev replied to a question posed at a meeting in Kiev whereby he was asked
where Kazakstan was going to find oil for the pipeline. "Negotiations are
in progress concerning the Odessa-Brody pipeline. Should agreements be reached
on delivery via this corridor, the Kazak side will take a positive view of
it," he said.
A Kazak-Ukrainian venture has been set up to build a Ukrainian terminal in
Odessa and for the laying of a 52-kilometres pipeline section, he said. The
Odessa-Brody pipeline is currently used in reverse mode, with oil flowing from
Brody to Odessa.
Recently, Alexander Todiychuk, chief executive of Ukrainian oil transportation
company Ukrtransnafta said that the 2005 volume of Russian oil to be pumped
through the pipeline would amount to about six million tonnes. Five million
tonnes have already gone through the pipeline since the start of the year.
Ukraine has reiterated its proposal for Russia to use Dnieper trunk pipelines,
which are vacant and use of which would be three Euro per tonne cheaper. At the
same time, Russia has submitted a draft protocol to Ukraine under which up to
nine million tonnes of oil are to pass through Odessa-Brody in 2006.
In September, Oleksiy Ivchenko, first deputy fuel and energy minister and chief
executive of national oil and gas company Naftogaz Ukrayiny, said the pipeline
would start to be used for transmitting oil from Odessa to Brody in 2006 and
that initially it would carry four million tonnes per year.
Transneft tears agreement with KazMunaiGaz
Transneft has pulled out of an agreement with KazMunaiGaz to offer the technical
possibility of pumping 12 million tonnes of the Kazak company's oil over the
next 10 years to Butinge, Lithuania, Transneft President, Semyon Vainshtok,
said, Interfax News Agency reported.
Transneft removed its signature from the agreement because KazMunaiGaz did not
fulfil its responsibilities to sign with the Russian government a protocol to an
intergovernmental agreement between Russia and Kazakstan, Vainshtok said.
Transneft, in signing the agreement with KazMunaiGaz, only guaranteed that it
was ready to offer technical support to pump this oil in the direction and
timeframe set out in the contract, however in order for this contract to enter
into force, changes needed to be made in the agreement between Russia and
Kazakstan, he said.
Tengizchevroil will not export gas to China
TengizChevroil, Kazakstan's largest oil producer, is not planning to export gas
to China, Alexander Cornelius, the company's director general said, Interfax
News Agency reported.
He said the company does not have any agreements to export gas to China. The
company's gas is mainly sent along the gas pipeline that goes through Kazakstan.
Some of the gas is delivered to Kazakstan and some to the world market, he said.
Kairgeldy Kabyldin, managing director of KazMunaiGaz, said in October that some
gas from the Tengiz field will be used to fill the gas pipeline to China that is
expected to be built in Kazakstan. He also said that TengizChevroil has held
talks with Atoll, the owner of the Polypropilen plant and the Aktausk plastic
mixture plant, on gas supplies under a programme to develop Kazakstan's
petrochemical sector.
Cornelius said that the company is finishing up work on a memorandum of mutual
understand to supply Atoll gas. TengizChevroil is doing everything possible to
cooperate in resolving this issue with Kazakstan, he said. Atoll owns the SAT
& Company Holding and Razvedka Dobycha KazMunaiGaz on a parity basis. The
SGP expansion plans aim for the extraction of an extra 12 million tonnes of oil
annually. In this way the company hopes to achieve production of about 25
million tonnes per year, he said.
"We have already adopted some optimisation proposals within this project
enabling volumes to increase by another two million tonnes," Cornelius
said. The proposals may be introduced sometime in 2008 and production should
grow to 27 million tonnes per year by 2010, he said.
TengizChevroil will produce 13.5 million tonnes of oil in 2005, 100,000 tonnes
less than in 2004, Cornelius said. The reason for the decrease is entirely
objective, he said. Certain installations were stopped during the year as
required by law, he said. TengizChevroil has five oil and gas cleaning branches,
four sulphur processing and gas cleaning branches and three gas rectification
installations, which have to be stopped from time to time. In addition, the
company had to repair or replace some equipment. TengizChevroil is also carrying
out certain modifications to increase equipment reliability and this also
requires production stoppages, Cornelius said adding that these factors
influenced performance results.
TengizChevroil, drills a quarter of Kazakstan's oil. It produced 13.6 million
tonnes of oil and 4.7 billion cubic meters of gas in 2004. The company exports
all the oil it produces via the Caspian Pipeline Consortium's pipeline.
ChevronTexaco Overseas owns 50 per cent of TengizChevroil, ExxonMobil Kazakstan
Ventures Inc, 25 per cent, Kazakstan's government 20 per cent (via KazMunaiGaz)
and the Russian-US LukArco joint venture five per cent.
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FOREIGN LOANS
EBRD to lend 87.8m Euro for Kazak power line
The European Bank for Reconstruction and Development (EBRD) will lend
Kazakstan's national power utility KEGOC 87.8 million Euro for the North-South
power transmission line project, the EBRD's Kazakstan office said in a press
release. The EBRD said that the loan agreement was signed in Almaty on November
24th, New Europe reported.
This new transmission line allows the north of Kazakstan to transmit its surplus
power to the more populated south of the country. This will both aid the
development of a Central Asian regional energy market and by benefiting both
populations and businesses based in the south, promote the diversification of
Kazakstan's economy away from dependence on oil and gas. It was also reported
that two substations will be expanded. This deal follows a 60 million Euro loan
agreement signed last year for the first, 270 km of line between YukGres and Shu.
The EBRD will lend 52.8 million Euro with a tenor of 12 years and 35 million
will be syndicated by Raiffeisen Zentralbank Osterreich, Bayerische Landesbank,
Calyon and Citibank and will be repayable in nine to 12 years. This commercial
financing demonstrates KEGOC's ability to attract international commercial banks
for long maturities on the basis of a domestically based security, said EBRD
president Jean Lemierre at the signing ceremony. The Development Bank of
Kazakstan is also lending another 53 million Euro and the International Bank for
Reconstruction and Development has agreed to provide a 100 million Euro
sovereign-guarantee loan for the power line project.
KEGOC signed the loan agreement with the World Bank on November 22. This is a
17-year loan at LIBOR +0.5 per cent with sovereign guarantees and a grace period
of five years.
Kazakstan may repay 849m Euro loans early
Kazakstan may pay off 849 million Euro in sovereign loans this year ahead of
schedule, Kazak finance minister, Arman Dunayev, said recently at a Cabinet
meeting, reported Interfax News Agency.
"Given today's trends on the international forex market, and in order to
sterilise surplus money supply, the finance ministry has decided to repay, ahead
of schedule, the sovereign loans that cost the most to service. Early repayments
will be 849 million Euro, equivalent to 111 billion tenges, this year,"
Dunayev said.
He said that would save the country 290 million Euro on future interest
payments. "According to preliminary forecasts, the entire sovereign debt -
both domestic and external - will be approximately 3.9 billion Euro at the end
of the year, or 7.8 per cent of forecast GDP," he said. The ratio of
sovereign debt to GDP has "fallen consistently" in recent years,
Dunayev said. "This has fallen from 26.5 per cent in 2000 to around 8.8 per
cent of forecast GDP by November 1st this year," he said.
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MINERALS & METALS
Mittal Steel to build pipe mill in summer 2006
Mittal Steel intends to finish building a pipe mill in Aktau, Kazakstan, by the
summer of 2006, Malay Mukherjee, Mittal Steel's chief operating officer said in
Temirtau, where Mittal has a major steel mill, Interfax News Agency reported.
"The plant in Aktau, which will produce spiral seam, welded pipes, will be
ready by the middle of 2006," Mukherjee said.
Mittal said in a brochure distributed at the press conference that the pipe mill
would be capable of producing 60,000 tonnes of pipe to international standards
457-1,422 millimetres in diameter, 5-19 mm thick and 6-13 metres long.
Investment will total 35 million Euro. Work on the plant started in the summer
of 2004.
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MINING
KazakGold raising US$176m via London flotation
KazakGold, the owner of one of Kazakstan's biggest gold miners, it to list on
the London stock exchange on December 1st and will become the latest company
from the former Soviet Union to come to the UK, the Financial Times reported.
KazakGold will sell 11.7m global depository receipts at US$15 each, raising
US$176m (£102m) and giving the company a market value of about US$707m.
KazakGold is the parent company company of Kazakaltyn, which has been mining
gold in northern Kazakstan since the 1920s. The proceeds will be used to expand
the company's existing mines and pay off debts.
The company is wholly-owned by the Assaubayev family, who bought the then
bankrupt mines from the Kazakstan government in 1999 for US$1m.
KazakGold was encouraged to list in London after the successful float of
Kazakmys, Kazakstan's largest copper producer, in October. ING is managing
KazakGold's listing.
Recently, Novolipetskm the Russian steel group controlled by billionaire,
Vladimir Lisin, confirmed it would be listing in London. The company will sell
about 7 per cent of existing stock in global depositary receipts. Reports
suggested the sale could raise up to US$750m.
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TEXTILES
Textile cluster in Kazakstan
Kazakstan the country on the positive transitional economic path is gearing up
to streamline the future of the textile and clothing industry. With a lot of
focus in Europe lately, much due to the liberalisation of this market, Kazakstan
is emerging as one of the promising and fast emerging markets in the region, New
Europe has reported.
The Kazak government launched a new ambitious development plan for 2003-2015 for
the industrial and innovative sectors aiming to ensure steady economic growth of
8-9 per cent and tripling GDP by 2015. This plan is absolutely essential for the
successful completion of the country's industrialisation process. In order to
promote diversification of the economy, Kazakstan has selected a cluster
approach for accelerated development of the priority sectors, namely oil and gas
mechanical engineering, transport and logistics, construction, metallurgy, IT,
food industry, tourism, and textiles.
In one of the plan's key measures, based on the incentives granted by the state,
a special economic zone called "Ontustyk" has been created in Southern
Kazakstan to boost the country's textile industry potential. In full conformity
with acting legislation, both foreign and domestic investors in special economic
zones and priority sectors of the economy in Kazakstan may benefit from the
lower corporate income tax (up to 50 per cent), property tax, land tax, and VAT
for up to 5 years, grants-in-kind, custom duty exemptions. Foreign investments
are not subject to nationalisation or expropriation. Businessmen are fully
within their right to freely use revenues of their investment activities.
The Kazak textile industry includes a group of light industries processing
natural, synthetic, and artificial fibres into yarn and fabric. According to the
National Statistical Agency's data, this industry's share in the GDP accounted
for only 0.4 per cent compared to 6-12 in the developed countries. Total market
share is around 10 per cent aiming to reach 30. Last years annual textile export
hit US$4.6 million, with 16.4 thousand people involved in this industry.
Yet Kazak companies and research institutes are not an integral part of the
universal value-added chain, having little financial knowledge to commercialise
their R&Ds. But the most important thing is that the situation is steadily
improving, thanks to experience gained in this arena. In the 1990s, Kazakstan
made wide concessions to foreign firms looking for new investment opportunities.
The analysis of the Kazakstan investment climate, and the textile sector in
particular, done by independent international institutions, as well as the
countries, deserves extremely high credit sovereign ratings, has shown investors
are mostly positive about it. Over a half of them are convinced that the
Kazakstan market is attractive because of the following reasons: access to
natural resources, the volume of this and neighbouring markets, as well as
stable and strategic position of Kazakstan. The country has taken the pole
position ahead of all other CIS countries drawing, after claiming independence
US$42 billion. All this may bring potential investors more profits than in other
markets.
Since the Kazak government declared its support to serious international private
sector partnership in the development of the textile industry in the coming
years, European companies with their rich expertise, looking for new markets and
thinking of their prospect investment destination, have a unique chance to bid
for participating in this rather exciting race.
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