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Risk Is Worth Its Weight in Gold

How a Kazakhstan EPC-contractor – “AAEngineering Group” LLP (AAEGroup) has successfully entered foreign markets, what difficulties the company experienced during construction of the Greenfield factory at the Jerooy deposit (Kyrgyz Republic), when the first gold bar was extracted, and was there a risk of failure to fulfill obligations are in the exclusive material Inbusiness.kz

Джеруй АА Инжиниринг

Expanding the export line of domestic goods and services and supporting export enterprises are the key issued on the government agenda of any developing country. Currently, the importance and expansion of the volume of export and import of services can hardly be overestimated. In the near future, a service sector will earn more than half of the world revenues.

The leading Kazakhstan engineering and construction company AAE Group which designs and builds “tunkey” large industrial facilities decided to occupy a niche of construction services in the market of the Eurasian Economic Union. The company accepted an order from the Kyrgyz side of “Alliance Altyn” LLC (structure of the “Russian Platinum” Group of companies (Russian Federation) for construction of the Talas gold ore plant at the Jerooy deposit which has become a successful international project of three neighboring states: Kazakhstan, Kyrgyzstan and Russia.

The AAE Group Company started executing the international order in 2018 and is completing it this year. Under the Project, a modern gold recovery plant with a capacity of 1.3 million tons of ore per year, related infrastructure as well as a tailing facility was built. The project fully complies with the best international practices in design and construction of MMC facilities. During the construction process, AE Group paid special attention to introduction of the latest technological solutions and principles of environmental safety and environmental protection that meet the requirements of ESG and the Laws of the Kyrgyz Republic.

Джеруй АА Инжиниринг

Production waste – tailings belong to the safest class of waste, semi-dry storage is used in the process of work: cakes have a residual humidity of up to 20 percent. And the geomembrane laid on the base of the tailings dump completely eliminates the drainage of residual moisture. Moreover, the company has applied modern technologies in the field of industrial water turnover – water from the tailings dump is returned to the technological process of the planr, and thus the intake of clean water is minimized as much as possible.

“The project is technically challenging, but over the years, the AAE Group has generated the necessary experience, knowledge and competencies for a comprehensive solution of the most complex tasks in mining and metallurgical industry. Each project is unique in terms of its implementation strategy and key risks. In addition to the technical component of the project, social, environmental aspects and country risks cannot be ignored. For example, in October 2020, when the “Jerooy” project was completed by 97% and commissioning work began, force majeure circumstances arose on the territory of the Kyrgyz Republic which threatened to disrupt the deadlines for the project. However, thanks to the joint efforts of the investor and the AAE, restoration work of the plant was completed as soon as possible, and on February 23, the plant produced the first gold bar, and later a grand opening was held with the participation of the heads of the two states of Russia and Kyrgyzstan”, - noted the Financial Director of the AAEngineering Group, Ualikhan Atageldiyev.

Джеруй АА Инжиниринг

Despite the difficult high-altitude conditions, pandemic and force majeure, AAE has completed another project (the twelfth in a row for the company) according to the international FIDIC standard – the silver book. The successful implementation of the Jerooy project would not have been possible without participation of the Development Bank of Kazakhstan JSC (a subsidiary of “Baiterek” National Managing Holding” JSC) which aims to develop the country’s non-resource sector and export potential.

“Commercial banks did not undertake to finance projects in the Kyrgyz Republic due to high country and political risks. Since one of the main goals of the DBK is to develop the country’s non-resource sector and export potential, the DBK supported us. Without the DBK, we would not have been able to successfully compete with leading engineering and construction companies for such a landmark project. The DBK believed in our project, and we trusted in experience and competence of the state Institute,” - said Ualikhan Atageldiyev, Financial Director of AAEngineering Group LLP.

The DBK, having experience in financing and profound analysis of high-risk projects, relied on success of implementation of domestic export services, and provided the construction company AAE Group with a bank guarantee in the amount of USD 37.7 mln. for a period of 3 years. It should be noted that the reference project was a pilot one – the DBK for the first time used the instrument as a bank guarantee for services in general and for the export of services, in particular.

здание банка

“Domestic enterprises in the field of gold mining and gold extraction have huge experience. Kazakhstan ranks among top 15 countries in the world in terms of proven gold reserves. In addition, from year to year, the country is increasing the pace of exploration of new deposits and increasing production of precious metal inside Kazakhstan. The choice of a Kazakh company by a foreign customer as a general contractor for construction of a gold recovery factory is a confirmation of the high level of professionalism of domestic enterprises in this direction. The Bank, in turn, within its authorities, for the first time issued bank guarantees for a domestic company engaged in the export of services. I would like to emphasize that the export of services was executed during the height of the pandemic, when logistics supply chains were disrupted and complete isolation regimes were introduced. Despite difficult implementation conditions, the supplier fulfilled its obligations to the customer for construction of a gold recovery plant,”- said Vladimir Li, Senior Banker of the DBK Customer Relations Directorate.

Владимир Ли

Thus, the Kazakh engineering company, having successfully completed the Jerooy project, has gained invaluable experience and continues to look for new niches in the international market. As you know, currently the company in the territory of neighboring Kyrgyzstan is implementing a project to build a gold recovery plant at the Dzhamgyr deposit; large projects from the Russian Federation and Uzbekistan are at various stages of development.

АО «Банк Развития Казахстана»
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