BMI View: Kazakhstan's mining sector remains well placed for long-term expansion over the next few years , with the country taking advantage of its geographical location to position itself as an important supplier of commodities to the Asian and European markets. While we forecast the prices of key mined commodities such as coal, copper and iron ore to remain weak through to 2020, the sector is well placed to take advantage of the upside and, in particular, renewed demand from the likes of China and India. Strengthening trade links with these markets appear to support his strategy.
|e/f = BMI estimate/forecast. Source: National sources, BMI|
|Mining Industry Value, USDbn||35.40||33.00||33.30||35.10||35.80||37.70|
|Mining Industry Value, USDbn, % y-o-y||2.20||-6.81||1.00||5.25||2.00||5.29|
Latest Updates And Structural Trends
Despite ongoing weakness in global commodity prices we anticipate positive growth in Kazakhstan's coal and iron ore production in 2016 and through the remaining forecast period. We forecast coal output to grow by 1.9% a year on average over 2016-2020 to reach 143mn tonnes (mnt), while iron ore output will increase by 1.2% to 28.1mnt.
Prices of both commodities will contract in 2016, with iron ore prices averaging USD53/tonne compared with USD56/tonne last year and thermal call slipping to USD53/tonne. The price of copper will also fall, averaging USD4,900/tonne compared with USD5,493/tonne in 2015.
The long-term growth of the mining sector will be supported by increased overseas demand as well as the growing needs of the domestic energy sector. The country's mining and energy sectors are attracting the attention of China and India and the Kazakhstani and Chinese governments recently signed agreements worth USD5.1bn in the field of transport, energy, nuclear, metallurgical and chemical industries. This includes the construction of a mining and metallurgical complex in Kazakhstan's Akmola region.
In fact, Chinese investment in Kazakhstan's mining sector will rise in the coming years. Chinese miners may be interested in acquiring Glencore's Vasilkovskoye gold mine, according to FT sources. Glencore said it is considering selling this mine which has more than 5m oz of proven and probable gold reserves in order to cut its debt.
Furthermore, multinational steelmaker ArcelorMittal announced the divestment of its Kuzbass coal mines in Siberia to Russia's National Fuel Company in January 2016. The move will allow the company to focus on its Kazakh mining operations, which has recently undergone a USD430mn expansion.
Kazakhstan may develop new mining sub-sectors in the coming years, including rare earth mining. Japanese companies are particularly interested as they wish to reduce their dependence on Chinese rare earth exports. The Nipponese Oil, Gas and Metals National Corporation signed in October 2015 a deal with local authorities to jointly explore for rare earths in the Karaganda and Kostanay regions.
The Kazakhstan Mining Report has been researched at source and features BMI Research's mining and commodity forecasts for metals, minerals and gems, covering all major indicators including reserves, production, exports and values. The report also analyses trends and prospects, national and multinational companies and changes in the regulatory environment.
BMI's Kazakhstan Mining Report provides industry strategists, service companies, company analysts and consultants, government departments, trade associations and regulatory bodies with BMI's independent forecasts and competitive intelligence on the mining industry in Kazakhstan.
- Use BMI's independent industry forecasts on Kazakhstan to test other views - a key input for successful budgeting and planning in this mining market.
- Target business opportunities and risks in Kazakhstan's mining sector through our reviews of latest mining industry trends, regulatory changes and major deals, projects and investments in Kazakhstan.
- Assess the activities, strategy and market position of your competitors, partners and clients via our Company Profiles (inc. KPIs and latest activity), Key Projects Tables and Competitive Landscape Tables.
BMI Industry View
Summary of BMI’s key forecasts and industry analysis, covering mining reserves, supply, demand and prices, plus analysis of landmark company developments and key changes in the regulatory environment.
Industry SWOT analysis
Analysis of the major Strengths, Weaknesses, Opportunities and Threats within the mining sector and within the broader political, economic and business environment.
BMI Industry Forecasts
Historic data series (2009-2013) and forecasts to end-2019 for key industry and economic indicators, supported by explicit assumptions, plus analysis of key risks to the main forecasts. Indicators include:
- Mining industry: Industry size (USDmn), real growth (%), % of GDP, employment (‘000), workforce as % of total workforce, average wage (USD).
- Output: Production volumes (‘000 tonnes, carats etc.) for all major metals, minerals, ores and gems mined in each state, including bauxite, copper, gold, coal, lead, silver, tin, titanium, uranium, zinc etc.
- Exports: Value of exports (USDmn) for all major metals, minerals, ores and gems mined in each state.
- Commodity markets: Global demand, supply, stocks and benchmark prices (USD) for aluminium, copper, lead, nickel, tin, zinc, gold and steel.
BMI’s Mining Risk Reward Index
BMI’s Risk Reward Indices provide investors (mining companies and support service providers) looking for opportunities in the region with a clear country-comparative assessment of a market’s risks and potential rewards. Each of the country markets are scored using a sophisticated model that includes more than 40 industry, economic and demographic data points to provide indices of highest to lowest appeal to investors, with each position explained.
Competitive Landscape Tables & Analysis
Comparative company analyses and tables detailing USD sales, % share of total sales, number of employees, year established, market cap/NAV, ownership structure, production and % market share.
Details and analysis of all current and planned developments (new ventures, capacity expansion and other investments) across the sector broken down by metal/ore.
Examines the competitive positioning and short- to medium-term business strategies of key industry players. Strategy is examined within the context of BMI’s industry forecasts, our macroeconomic views and our understanding of the wider competitive landscape. The latest financial and operating statistics and key company developments are also incorporated within the company profiles, enabling a full evaluation of recent company performance and future growth prospects.
The Mining reports are based on an extensive network of primary sources, such as multilateral organisations (UN, WB, IMF), national chambers of commerce and industry, national statistical offices, government ministries and central banks, and multinational companies.
*Company profiles are not available for every country. Those reports instead contain information on the current activities of prominent companies operating in the market.