- The Development Bank of Kazakhstan provided a loan for the construction of a sulphide ore processing plant with a 25 Mt capacity per annum as part of the construction of the Aktogay GOK in the East Kazakhstan Region. At what stage is the implementation of the project now?
- KAZ Minerals is currently in the construction phase of this $1.2 billion expansion project to double the sulphide ore processing capacity of the Aktogay mine. The construction is being performed by a number of local contractors, supervised by KAZ Minerals’ project staff, with the first ore to be processed at the new plant in 2021. On site, the foundations of the new buildings are complete, the structural steel has been erected and we are currently enclosing the buildings to enable work to continue over the winter. I will note that the Development Bank of Kazakhstan also provided a loan of $ 300 million for the construction of the first Aktogay concentrating mill in December of 2016. Therefore, DBK is one of the main financial partners in the implementation of production expansion projects at Aktogay I and Aktogay II.
When the new processing plant is complete, the Aktogay mine will produce an additional 80 kt of copper per annum. With Bozshakol and the first Aktogay processing plant and mine already in operation, when complete this expansion will represent the third globally significant mining project constructed by KAZ Minerals in Kazakhstan since 2016.
- It is assumed that ore processing capacity after the completion of the project (from 2022) will double. Will capacity continue to increase?
- KAZ Minerals has an industry leading reputation for project delivery having achieved an annual growth rate of 50% from 2015 to 2018. This expansion project is intended to continue that growth into the next decade. We will certainly continue to explore for more resources at Aktogay and if an opportunity is identified to expand capacity further we will look at it carefully.
– If you evaluate the economy of the project as a whole, what indicators do you expect (job creation, increase in tax revenue, growth in export revenue, etc.)?
- The new processing plant at Aktogay brings significant long-term benefits to Kazakhstan. The construction project represents an investment of $1.2 billion and will employ around 3,000 contractors on-site. For future operations, the new plant will directly create around 1,000 permanent jobs and we are currently starting to recruit. The new plant brings advanced mining technology to Kazakhstan, and we are investing in training staff in its operation and maintenance. To support our operations in the long-term, we are working with local schools and colleges by designing technical courses, providing equipment and access to our facilities, which will better equip future graduates. I am proud to have recently taken on our first intake of apprentices, with 200 young graduates currently undergoing training at Aktogay.
The additional volume of copper production from the expansion increases the mineral royalties, corporate income tax and other taxes we pay in Kazakhstan as well as generating export revenues and economic growth for the country. We also prioritise local suppliers which leads to indirect employment and further economic growth.
- Your main market is China. Is there a danger of “sharpening for one client”? Moreover, it is known that China is actively developing and diversifying its production. Do you consider the possibility of diversification of supplies, mastering the markets of other countries?
- The global copper market is forecast by the majority of commodity analysts to enter a supply deficit in the medium term as output from existing mines decline and there are limited projects under construction. Demand for copper is forecast to remain strong as the traditional drivers of economic development and urbanisation are supplemented by new demand from investment in clean energy generation and the increased adoption of electric vehicles. China is the most important market for copper and consumes 50% of the world’s current production. Kazakhstan has a close relationship with China and KAZ Minerals has built deep relationships with its customers in China which we are confident will continue for the long term. We utilise Kazakhstan’s rail infrastructure which gives Aktogay to access to the Chinese market in just two days.
- Any production has LOM. It is known that the development period of Aktogay is estimated at slightly less than 30 years. Do you build long-term plans for reorientation, modernization of the plant after the completion of mine development?
As part of the mine design, before we start construction, KAZ Minerals develops detailed rehabilitation plans to be followed when the mine closes, which for Aktogay will be in approximately 30 years. As a responsible developer and operator of mining assets we revisit these plans periodically to ensure they remain up to date and fully costed.
Whilst we are focused at present on completing the Aktogay expansion, we will continue to seek further new opportunities in Kazakhstan. With KAZ Minerals’ leading expertise in the development of new mines combined with support from DBK, we look forward to building on our partnership and realising the value of Kazakhstan’s abundant natural resources for the benefits of all stakeholders.
