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KAZAKSTAN


 

 

Key Economic Data 
 
  2003 2002 2001 Ranking(2003)
GDP
Millions of US $ 29,749 24,205 22,400 60
         
GNI per capita
 US $ 1,780 1,510 1,350 119
Ranking is given out of 208 nations - (data from the World Bank)

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Update No: 319 - (26/07/07)

Astana - the new capital a decade onwards
Countries sometimes try to get themselves out of trouble by changing their capital. This is especially true when the capital is out on a limb at the extremity, rather than the heart, of a country; leading to a neglect of the hinterland. Brazil famously did it with Brazilia in the middle of the last century, without notable success. Burma is doing it today, apparently under the influence of astrologers, in whom the military junta running the show have a firm belief, unlike in democracy. They are building a 'secret' capital 300 miles north of Rangoon in a malarial swamp, the heart of nowhere, Nay Pyi Daw. 

The Kazaks are nomadic in origin and fervent believers in moving on. Ten years ago their economy was in big trouble, with a free-fall from communist planning. In 1997 it was decided to move the capital from Alma-Aty, nestling under the Tien Shan mountain range, on the extreme south east of the country to Astana in the centre of it.

Many argue that a drive to attract ethnic Kazakhs northward was the key factor in shifting the capital, which was officially put down to lack of space for expansion in the former capital, Almaty, and its location in an earthquake zone.

Bringing the capital north had the effect of squashing nascent separatist tendencies among some ethnic Russians in the region. "By bringing the physical institutions of state closer to the locus of the perceived unrest, Nazarbayev showed his readiness to confront threats at a moment's notice," argues academic Edward Shatz in a working paper on the move.

Astana's population has more than doubled since the move, to over 600,000, and it is estimated to top 1 million by 2030. Migrant workers - legal and illegal - have been attracted from across Kazakstan and neighbouring states such as Uzbekistan and Kyrgyzstan, and Astana is a magnet for young professionals seeking to build a career. This has changed the city's demographics, bringing more ethnic Kazaks to a city that formerly had a Slav majority. Astana's ethnic Kazak population has risen to some 60 per cent, up from 17 per cent in 1989.

A celebration of success - of Astana and Nazerbayev
The decision may be deemed to be fortuitously successful. The country has boomed since Astana's remake, in particular since 2000. A decade after Kazakstan's capital shifted north, Astana held a lavish celebration to mark the occasion. Amid the festivities, President Nursultan Nazarbayev, the man responsible for shifting Kazakstan's capital, marked his 67th birthday. 

The anniversary featured 50 events, staged in and around the capital. In addition, the openings of some 30 new facilities - including health clinics, public buildings and bridges - coincided with the festivities. The entertainment began on July 1 with the opening of a new hippodrome for horse racing and traditional Kazakh equestrian sports. 

The decision to move to Astana was taken in the mid-1990s, with Nazarbayev decreeing that the transfer would take place in 1997. The seat of government shifted in December that year, but the official unveiling of the city took place the following June. Thus, Astana will officially celebrate its 10th anniversary next year. Those festivities, many observers believe, will dwarf this year's munificent display. Last year, the city's official anniversary was moved from June to July 6, Nazarbayev's birthday, to mark the anniversary of the parliamentary vote confirming the move north. 

Local residents marvel at the changes that have occurred over the past decade in the city, which was founded as a fortified outpost in the early 19th century, and in the 1950s became the centre of then-Soviet leader Nikita Khrushchev's ambitious and ultimately disastrous Virgin Lands agricultural programme. 

"This was all dachas," said a street sweeper cleaning a fountain in the new part of town, gesturing at the grandiose skyscrapers lining the promenade extending from the presidential palace to the extravagant headquarters of the national oil and gas company.

"Of course it's changed hugely," agreed a pensioner watching the celebrations. "The town has grown at such a rate. We didn't imagine it would be possible to build what are effectively two towns so quickly. On the left bank there was nothing but dachas, steppe and forest - and now look." 

Nazarbayev has been accused by some of building a folly. He rebuffs criticism that the funds could have been better spent on public services, saying that the lion's share of investment in Astana's development has come from private capital. Some US$12 billion has been invested in Astana, he said on July 4. Some observers suggest that figure is a low estimate. A total of US$5 billion has been invested in the government quarter alone since the establishment in 2002 of a Special Economic Zone offering tax incentives to investors. 

Regardless of the cost, there's no disputing that Astana has experienced a construction boom on a grand scale, and there is still five years to go: many major projects are due to be finished by 2012, coinciding with the end of Nazarbayev's current term in office. Some 15 million square meters of construction is planned for the coming years, Astana Mayor Askar Mamin said recently. "By area, that's another Astana," he told the city council. 

Among the big projects still in the developmental stage is Khan Shatyry (the Khan's Tent), emphasising the nomadic origin of Kazakhstan once again, which is envisioned as a giant dome that will house entertainment facilities, and provide a comfortable environment during the severe winters. Khan Shatyry is being designed by architect Norman Foster, who has already built a pyramid in Astana housing an opera house and hanging gardens. There are also plans to build an indoor town for 10,000 people called Batygay. 

The rapid rate of construction has not pleased all the city's inhabitants, with some complaining of sloppy standards. "I don't really trust all those buildings," said a former Almaty resident who moved to the capital to work in an embassy. "Some of the buildings are already cracked." 

Clan affiliation was also a factor, observers say. Almaty is ostensibly controlled by the Uly Zhuz (Great Union) clan. Despite being a Uly Zhuz member himself, Nazarbayev, reportedly wanted to dilute that clan's political influence, and so he moved the capital to a location where another clan, the Orta Zhuz (Middle Union), was predominant. The move also brought the capital closer to the 7,000-km border with Russia, a key ally, and away from the Chinese border. 

Astana's residents express satisfaction with the economic regeneration the move has brought. "There are lots of towns around Astana and they are developing in parallel," said Margulan Rakhimbekov, a company manager who moved to Astana from the nearby city of Karaganda to further his career. 

The move has also produced a fair share of lifestyle hassles. A recent poll by the Parasat analytical centre revealed that the capital's residents are discontent with the high cost of housing, insufficient public transport and constant traffic jams. At the same time, three-quarters of those interviewed said they were generally satisfied with the course of developments. 

Many observers conjecture that Astana, which has changed its name four times in the past five decades, might soon be renamed after the president. Nazarbayev's public rejection of the idea during the anniversary celebrations is unlikely to dampen speculation.

CENTRAL ASIA FACES GRIM ENVIRONMENTAL FUTURE -- UN REPORT 
Mudslides produced by heavy rain in the spring wrought havoc in southern Kyrgyzstan, damaging hundreds of homes and killing livestock. Such natural disasters could well become more severe and more frequent in Central Asia over the coming decades, according to a new United Nations report on climate change. 

The report, issued April 6 by the UN's Intergovernmental Panel on Climate Change (IPCC), paints a grim picture for Central Asian governments and policymakers. In the strongest warning yet issued about the influence of humans on the environment, the report says with "high confidence" that soon the region's mountain ranges will not be able to provide the water necessary to support current agricultural practices. 

"Climate Change 2007: The Physical Science Basis" is a summary of over 1,000 pages of findings made by the IPCC. The report initially forecasts avalanches, increased runoff and earlier spring peak discharge from glaciers and floods due to unseasonable rains. But by the end of the 21st century, disappearing glaciers in the Tien Shan, Pamir and Hindu Kush mountain ranges will result in decreased river flows and severe water shortages. Temperatures may experience a dramatic increase, while crop yields are forecast to fall 30 per cent by 2050. 

The April 6 summary is just one of a series of publications from the IPCC that have identified significant problems for water supplies in the area. "The IPCC's warnings about melting glaciers, floods and eventual water scarcity have been identified as one of the key vulnerabilities," said John Coequyt, an energy and global warming specialist for Greenpeace. "It's one of the report's most important findings. But few governments worldwide understand this, and I don't think any of the countries in Central Asia have taken it onboard."

While rising temperatures may provide short-term benefits for the region's lucrative cotton industry, the lack of ample irrigation may ultimately doom the cash crop. Mass unemployment looms in already unstable areas, especially in the Ferghana Valley, if Central Asia's cotton sector collapses. 

In Tajikistan, the cotton industry employs about 80 per cent of the country's rural labour force and the crop is the country's second largest export. However, 75 per cent of Tajikistan's poorest citizens live in cotton growing areas, according to the World Bank. 

Elsewhere, cotton production employs up to 3 million Uzbeks and generates 24 per cent of the country's US$8.7 billion GDP, providing the Uzbek government with an annual income of over US$1 billion. These exports account for about 60 per cent of Uzbekistan's hard currency export earnings. 

To avoid economic and political disaster, experts say immediate water-sector and agricultural reforms are needed. Central Asia's geography, which compels states in the region to share water resources, dictates an international solution. Since the collapse of the Soviet Union in 1991, hundreds of inter-governmental documents have been signed on water policy. Yet each agreement suffers from a fatal flaw -- none is legally binding. Thus, tension over water resources -- pitting upstream (Kyrgyzstan and Tajikistan) against downstream nations (Uzbekistan, Turkmenistan and Kazakstan) -- continues to plague regional relations. 

Fast action in some instances could be undertaken without inflicting major pain to national economies, experts contend. "Only for climate-change deniers could [the IPCC report] appear to be a worst-case scenario." said Peter Bloch, an agrarian reform expert who has worked on a variety of donor-funded programmes in Uzbekistan. "[In Uzbekistan] there is a huge potential for water savings with relatively minor investments in equipment." 

The Uzbek government, however, is unlikely to take the steps necessary to achieve such savings. Agrarian discontent simmers in Uzbekistan, where government forces have clashed with farmers and local business owners. Meaningful reforms that encourage better resource management would, at the same time, give farmers greater control over their crops -- something that is not in the political elite's interests. 

The problem is such no state can solve it on its own. Yet, regional leaders have not demonstrated any desire to agree on a comprehensive regional framework to manage water resources. "Individual farmers will not have any incentive to be environmentally 'responsible' if their neighbours -- whatever their land ownership status -- are not 'responsible' as well," said Bloch. 

Environmental degradation and water scarcity have the potential to propel Central Asia into a downward spiral of conflict. "The thing about climate change is that it makes existing problems worse," said Coequyt. "The problems that Central Asia faces today are going to be exacerbated by climate change in the very near future." 

Kazakstan, Russia: Moscow's Pipeline Attack
It is vital for Kazakstan to engage with a wider world. It needs above all to manoeuvre a way out of the sphere of influence of Russia. Recent events have made this plain. Russia is playing Big Brother once again. Its Federal Tax Service has assessed US$290 million in back taxes and fines against the Caspian Pipeline Consortium (CPC), Kommersant reported on July 13th. 

The CPC pipeline, built in 2001, ships about 540,000 barrels per day (bpd) from some of Kazakhstan's most productive oil fields near Tengiz to Russia's Black Sea port of Novorossiysk. The consortium is made up of seven partners, with Russian state-owned oil transport company, Transneft, the government of Kazakstan and U.S. energy giant Chevron Corp. owning the largest stakes. Transneft's partners have long campaigned to increase the capacity of the pipeline to take advantage of Kazahstan's rising oil production by increasing shipments through Russia.

The move by the Russian fiscal authorities is part of a larger assault on the consortium whereby Russian state-owned oil transport company, Transneft, and the Russian government are challenging the last privately-owned pipeline in Russia. Previous Russian attempts to stifle the CPC pipeline have prompted neighbouring Kazakhstan to join alternate pipeline projects to export its oil, pushing the former Soviet state further from Russia's influence. This round will be no different. 

The move represents a blatant attack against the last privately-owned Russian pipeline, something Moscow has sought control of for some time. 
Kazakhstan needs a new geopolitical deal to ease itself out of the fatal embrace of Muscovy- com-Siberia.

The Caspian canal offers the way out
With an eye on global trade, Kazak leaders want to build a new canal to bridge the Caspian and Black seas. 

Kazak President Nursultan Nazarbaev's proposal to build a new canal to connect the Caspian and the Black seas reinforces his ambition to enhance petroleum-rich Kazakhstan's competitiveness and gain access to bigger markets. 

The Kazak leader's call to build a 700-kilometer "Eurasia Canal" would, he says, transform landlocked Kazakstan and all Central Asian countries into maritime states, enabling them to significantly increase trade volume. 

While the canal would traverse Russian territory, it would benefit Kazakstan through its Caspian Sea ports. "The Central Asian and Caspian regions are rich in energy resources & but these reserves have to be delivered to world markets," Nazarbayev told participants at an international economic forum in St. Petersburg, Russia, in mid-June. The new canal, he said, would be a "powerful corridor" providing an outlet to global markets. 

Nazarbayev wants to build a shorter, more direct channel between the Caspian and Black seas, supplementing a canal, the Volga-Don, which is a longer route and was completed more than 50 years ago. Nazarbayev has emphasized his desire to work with Russia on the plans. 

Shortly after promoting the idea in St. Petersburg, Nazarbayev said in Ust-Kamenogorsk, Kazakstan, "We have heard some of our Russian colleagues say that Kazakstan will bypass Russian territory. But we will not bypass anyone. We are searching for routes that will benefit the export of Kazak products. I say to Russia: let us build a canal!" 

PLANNING STAGE 
Amirkhan Kenshimov, deputy chairman of the committee on water resources at Kazakhstan's Agriculture Ministry, told TOL a few possible routes for the canal are now being scrutinized by a working group at Kazakstan's Academy of Sciences. The group is expected to make recommendations by the end of the year. 

"All the routes are planned to be laid entirely in Russian territory," Kenshimov said. The expansion of the existing Volga-Don shipping canal is not excluded but this would be the longest route, he said. 

The Volga-Don canal links the lower Volga River, flowing into the Caspian Sea, with the Don River, which feeds the Sea of Azov to the north of the Black Sea. For a decade, tens of thousands of prisoners constructed that 101-kilometer canal. Completed in 1952, the waterway links the rivers at their closest point in Russia's Volgograd province. 

This network allows an important shipping network between the Caspian and Black seas, and ultimately the Atlantic via the Mediterranean. Kenshimov says, though, that the capacity of the Volga-Don does not meet today's needs. 

Serik Primbetov, deputy secretary-general of the Eurasian Economic Community (EAEC), has told local media that the existing Volga-Don canal can carry up to 13 million metric tons per year. The EAEC comprises the former Soviet republics of Belarus, Kazakhstan, Kyrgyzstan, Russia, Tajikistan, and Uzbekistan. 

But some shippers complain of limited capacity and access to the Volga-Don route. 

REGIONAL BENEFIT 
The Kremlin actively supports building a new canal. In April, Russian President Vladimir Putin proposed an international consortium to build a second leg of the Volga-Don, a call that was freshly reiterated by First Deputy Prime Minister Sergei Ivanov. Ivanov has welcomed private and foreign capital, including that of Central Asian states, to expand the Volga-Don. 

The RIA Novosti news agency quoted Ivanov as saying a concession to expand the canal is attractive to Russia's partners. "Joining the concession will actually turn Azerbaijan, Kazakstan, and Turkmenistan into maritime countries," he said. 

Kazak authorities are optimistic about lining up investors for the Caspian -- Black seas project, which they estimate will cost US$6 billion and take up to 10 years to build. 

In St. Petersburg, Nazarbayev called for constructing a canal that would be an almost straight shot across the North Caucasus, nearly 1,000 kilometres shorter than sending goods via the Volga-Don network. 

Half the distance is already covered by navigable reservoirs in the Kuma-Manych Depression of southern Russia. 

GREATER CAPACITY THAN VOLGA-DON 
According to Primbetov, the new canal would be 80 meters wide and 6.5 meters deep, accommodating vessels with a load-carrying capacity of 3,500 -- 5,500 tons as well as newer ships of up to 10,000 tons. Planners estimate the time to deliver cargo from the Caspian to the Danube at nine to 12 days. 

The new canal's traffic handling capacity would be about three times greater than the Volga-Don canal. The canal would link the Caspian and Don via the Kuma and Manych rivers. 

According to Kenshimov, governments and private businesses could participate in funding the Eurasia canal. 

Kazakstan possesses enormous fossil fuel reserves, other minerals, and metals for export. With its booming energy sector, economic reform, good harvests, and foreign investment, the country enjoyed double-digit growth in 2000 -- 2001 and 8 per cent or more per year in 2002 -- 2006. Per capita gross domestic product in Kazakstan last year was about US$9,400, lower than in Russia (US$12,200), but more than four times higher than in neighbouring Uzbekistan. 

Possessing about 26 billion barrels of proven oil reserves and 1.8 trillion cubic meters of natural gas, the country aims to produce as much as 3 million barrels of oil per day by 2015. This would lift it into the ranks of the world's top 10 oil-producing nations. It is the world's ninth largest country in land area and shares borders with China, Russia, Kyrgyzstan, Turkmenistan, and Uzbekistan. 

Kazakstan exported 52.3 million tons of oil in 2006, of which about 80 percent travelled through Russian pipelines. Main oil export routes are the Caspian Pipeline Consortium and the Atyrau-Samara oil pipeline to Russia, and Kazakstan-China oil pipeline to China. 

Kazakstan is currently planning to build a port on the Caspian coast to transport its oil to the Baku-Tbilisi-Ceyhan pipeline when the gigantic Kashagan oil field starts production. But the country "can't depend on a single pipeline," Deputy Energy and Mineral Resources Minister Bolat Akchulakov told Dow Jones Newswires in late June. "It's an issue of diversification of export routes for us so that should something happen with one pipeline we have alternative routes of transportation." 

Maksut Sarsenov, a political analyst from Kazakstan's Association of Sociologists and Political Analysts based in Almaty, said a new canal "will give advantages to Kazakhstan, Russia, and other countries, which should have no objection." Goods from the region would reach different countries via the Mediterranean and the Atlantic more cheaply because of reduced transport costs and shipping time. 

Along with Kazakstan and Russia, the interested parties are Azerbaijan, Iran, and Turkmenistan, surrounding the Caspian; and Turkey, Romania, Bulgaria, Ukraine, and Georgia, bordering on the Black Sea in company with Russia. 

ENVIRONMENTAL CONCERNS 
But Bakhtiyar Albani, deputy head of Kazakstan's Tabigat environmental union, is sceptical of benefits which the nation could reap of the new canal, calling the project "a dangerous utopia which can be reached but will finally result in colossal losses." 

"The difference between the ecological systems of the Black Sea, which is a distant arm of the Atlantic Ocean by way of the Mediterranean Sea, and the Caspian Sea, can lead to a catastrophe," he told TOL. "The new trade route will undermine the environment, people's health and the economy." 

He maintained that the project sprang from Nazarbayev's ambition to build "the project of the century." 

Kenshimov, however, said the ecological impact of the project is being scrutinized thoroughly because "when the two seas are linked with each other, they will have a uniform flora and fauna." 

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BANKING

Unicredit buying controlling stake in ATF Bank

Bank Austria Creditanstalt, which is part of the European banking group UniCredit, has signed an agreement on the purchase of a controlling stock interest in Kazakstan's ATF Bank, the group said in a statement, New Europe reported.
UniCredit valued the bank at US$2.175 billion, although this amount does not take into account a US$100-million increase in its charter capital that the current ATF shareholders will carry out before the transaction is completed.
"Bank Austria Creditanstalt is striving to acquire a 100 per cent stake in ATF Bank by purchasing the shares of current majority shareholders and by taking part in a tender that is to be announced by minority shareholders. The bank expects that its stake in the charter capital of ATF Bank will total at least 85 per cent as a result of these transactions," the statement read. The purchase will be completed in the second half of 2007. The group will use its own internal resources to finance the deal.
UniCredit's financial consultants in the deal are Credit Suisse as well as UniCredit Markets & Investment Banking, while its legal consultant is Allen & Overy. According to UniCredit, ATF Bank has an 11.8 per cent share of the Kazak banking market and total assets of 6.3 billion Euro at the end of 2006. The bank also operates in Kyrgyzstan, Tajikistan and Russia via subsidiaries.

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ENERGY

Eurasian Development Bank to help build NPP

The Eurasian Development Bank is prepared to take part in a project aimed at building a nuclear power plant in Kazakstan. The bank's participation in the project "has already entered the stage of definite agreements, which are included in a memorandum we have signed with Kazatomprom and Techsnabexport," the bank's CEO, Igor Finogenov, told a news conference in Almaty on June 19th, New Europe reported.
"The memorandum regulates our relations, including during the construction of new power generating units for nuclear power plants," Interfax quoted him as saying.
"We are ready to do it. We are now discussing the exact form of our participation. I am convinced that we will prove instrumental in implementing these large-scale projects in the nuclear power sector," he said.
In December 2006, the Eurasian Development Bank, national atomic energy company Kazatomprom and Russia's Techsnabexport signed a memorandum on cooperation, which allows the bank to finance joint projects of Kazatomprom and Techsnabexport. The Eurasian Development Bank is an international financial organisation, which was founded by Russia and Kazakstan in January 2006 to help its member-countries develop their market economies and expand mutual trade and business ties. The bank has a US$1.5-billion charter capital.

Kazakstan, TengizChevrOil plan gas processing complex 

Kazakstan wishes not to limit its exports to its main mineral riches -- oil and gas -- but to also sell refined products that are priced higher in the world markets. However, it seems that the plans of the Kazak government for the development of the country's petroleum and gas products industry do not exactly match those of the foreign investors who are interested solely in the production of crude, New Europe reported. 
The Kazak government has held long talks with TengizChevrOil (TCO) on securing Tengiz gas for the future gas processing complex, the construction of which is going to start this year in the Atyrau province. "Before the end of this month, we are planning to sign a propane supply contract with TCO, and in the next month -- a 13 year contract with a five-year extension option for supply of dry gas from Tengiz," national company KazMunaiGaz representative, Murat Dosmuratov, told New Europe.
According to him, it was "a very long negotiation process with TCO" that the national company had started back in September of the last year. This has resulted in the extension of the gas processing complex project for a whole year, from 2011 to 2012. 
To appreciate the importance of these TCO contracts for the Kazak economy, it is worth noting that Kazakstan has set a goal to change its image from a primary producing country to a country that is capable of producing high priced goods. The development of petrochemistry should bring the economy of Kazakstan to a qualitatively new level. The integrated petrochemical complex in Atyrau should become one of the steps that would bring Kazakstan to this goal. The heart of the complex will be a gas chemical plant that will use Tengiz gas at the first stage and Kashagan gas at the second. 
According to the specialists, Tengiz gas has a unique composition -- its ethane content reaches as high as 15 percent. There is a limited amount of similar gas in the world. Such gas is ideal feed for gas based chemicals.
The design capacity of the future gas chemical plant is 1,200,000 tonnes per year, which suggests a lot of feed. However, as it turned out, the plans of the Kazak government for the development of the country's petro- and gas chemicals do not exactly match those of the foreign investors developing the Tengiz field. TCO needs the by-product gas too, first of all, to maximise the yields of oil. 
According to the specialists, Tengiz is a young field, but with time, the natural pressure in the reservoirs goes down. To respond to the pressure reduction in the future, TCO is carrying out several projects to not only maintain the required pressure, but to also almost double the production. At the first stage, it will be increased to 20 million tonnes a year, and at the second stage - to 30 million. One such project - re-injection of sour gas - is scheduled to start this year.
In addition, since 2001, TCO has independently put into operation new facilities that enabled it to process the entire volume of sour gas and receive the so much in demand today propane and butane. TCO has managed to bring the quality of these products to the world standards, which allowed it to successfully sell them in the local markets and in Europe. 
Considering the above, the reluctance of TCO to commit to gas supplies for the new gas complex in Atyrau is quite understandable. With current prices for oil, who would like to compromise on their own plans and interests? 
The parties could not find a solution to the issue for a long time. As the national company representative explained: at first the talks concerned the price for gas, but then gas volumes became the stumbling block.
"After long negotiations we could finally persuade the management of TCO that the 1.8 billion cubic metres of gas that would not be re-injected in the reservoir and instead would be fed to the gas chemical complex would not significantly affect the oil production at Tengiz," Dosmuratov said.
Considering the circumstances, it's hard to imagine how the Kazak side managed to commit TCO to such volumes of gas. Most probably, in return, TCO will be offered some privileges or business propositions. According to the national company representative, the work to attract investments for the future gas chemical complex will be continued after the signing of the feed contract. The project cost is US$ 5.2 billion, so KazMunaiGas will not afford it on its own and will have to raise funds.
The new plant is expected to produce polyethylene and polypropylene, which, in their turn, will be used as primary material for more expensive products. 
Interestingly, only 20 percent of the complex's future output will go to the local market. The rest will be exported to China, Russia, Turkey, and Europe. So the expected revenues from the new production are promising.

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FORESTRY & PAPER

Kazakstan Kagazy in US$350m IPO

Kazakstan Kagazy, the paper and packaging producer and property developer, is set to raise US$350 (£174m) for its initial public offering on the London Stock Exchange recently, the Financial Times reported.
The company said shares, in the form of global depositary receipts (GDRs), would be offered at between 750 cents and 950 cents a share.
The fundraising exceeded Kagazy's initial plans to raise about US$300m and the figure could rise to US$402m if an over-allotment option is exercised in full.
The price will give Kagazy, central Asia's largest producer of paper, a market capitalisation of between US$650m and US$750m. Its other assets include Peak, a subsidiary company with about 500 hectares of real estate outside Astana, the Kazak capital.
The offering includes US$275m of primary shares to be issued by Kagazy as well as the sale of US$75m of shares offered by some of its main shareholders.
The shares are majority-owned by Maksat Arip, chief executive, and Baglan Zhunussov, chairman. "The offering on the London Stock Exchange will help us strengthen our position as a major industrial group in Kazakstan with a diversified set of interests in paper and industrial real estate, broaden our investor base and fulfil our set of objectives," said Mr Zhunussov.
Kagazy is the latest in a string of fast-expanding companies from the central Asian republic coming to London in search of capital and a higher profile.
The country has one of the region's fastest-expanding economies with a banking system more developed than that of its neighbours, Russia and Ukraine.
Most companies have opted for a secondary GDR listing instead of a primary listing of shares as legal requirements are less onerous.
Kazakmys is the region's only company to have a primary listing although another mining group, Eurasian Natural Resources Corporation, is considering a primary listing in London.
A depositary receipt represents ownership of a number of a company's shares and can be listed and traded - in a different jurisdiction - independently of the underlying stock. ING is the global co-ordinator, bookrunner and lead manager.

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