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Mining

Kazakhstan Mining Royalty System Delayed Until 2029

Kazakhstan plans to delay a new mining royalty system until 2029, postponing a reform that would tax raw ore more heavily than metals processed inside the country. The government backed the two-year delay, saying parts of the system still need further work. The royalty regime would apply only to new mining licenses issued from 2027 onward for areas where mining rights have not previously been granted. For example, a company receiving a new license to develop a previously unlicensed copper deposit would come under the royalty system, while an existing copper mine would continue paying the current mineral extraction tax, or MET. The main difference is when and how the tax is calculated. Under MET, tax is charged on minerals extracted from the ground. Under the proposed royalty system, the payment would instead be linked to the sale of the mineral product. This approach is more closely tied to actual sales. More significantly, the tax rate would fall as the mineral is processed further. The Tax Code sets a rate of 13% for ore, 10% for concentrate, and 7% for metals. A miner selling raw ore would therefore face almost twice the royalty rate of a company producing metal, giving businesses an incentive to process more of their output in Kazakhstan. Putting the system into practice has proved more difficult. The government says it still needs to decide how royalties should be calculated on minerals recovered from old tailings and other mining waste, and how the rules should treat expensive new projects and valuable minerals produced alongside a mine’s main commodity. The proposed rules will be tested against mining companies’ financial models before they take effect. The Finance Ministry had previously raised concerns about a rapid transition to royalties. In 2024, the State Revenue Committee estimated that applying rates similar to those used in Western Australia could reduce annual budget revenue by about KZT 270 billion ($606 million), while extending royalties to all subsoil users could result in losses of about KZT 450 billion ($1.01 billion). Those estimates do not apply directly to the much narrower reform now planned, which covers only future licenses in areas where subsoil use rights had not previously been granted. They do, however, help explain the government’s caution over changes to subsoil taxation. The State Revenue Committee says tax payments from more than 7,000 subsoil users, including oil and gas producers, account for around 35% of Kazakhstan’s republican budget revenue. The postponement therefore leaves the main structure of the reform intact but gives the government another two years to decide how it will work in practice. The Times of Central Asia previously examined the arguments surrounding the reform and Kazakhstan’s effort to link mining taxation with greater domestic processing.

Uzbekgaz

SOCAR and BP Prepare for Exploration Drilling in Uzbekistan’s Ustyurt Region

Azerbaijan’s SOCAR, Britain’s BP, and state-owned Uzbekneftegaz are preparing for exploration drilling across six blocks in Uzbekistan’s Ustyurt region. Following completion of a 3D seismic survey, the next stage involves processing the data and selecting a site for the first exploration well. Drilling will help establish whether preliminary estimates of 100 million metric tons of oil and 35 billion cubic meters of gas could translate into commercially recoverable reserves. The work covered the Boyterak, Terengquduq, Birqori, Kharoy, Qoraqalpoq, and Qulboy blocks in the Republic of Karakalpakstan. The seismic survey covered more than 3,000 square kilometers, compared with a minimum commitment of 1,000 square kilometers. The partners reviewed the completed fieldwork and discussed preparations for exploration drilling at a managing committee meeting in Tashkent on September 7. The data still need to be processed and interpreted, and no drilling location or date has been announced. Total investment in the project has been estimated at approximately $2 billion, with development dependent on a commercial discovery. The partners remain at the exploration stage and have committed to drilling one well. Decisions on further investment will depend on its results. Uzbek officials expect the six blocks could contain around 100 million metric tons of oil and 35 billion cubic meters of gas. Potential annual oil production has been estimated at five million metric tons. All three figures remain projections: seismic data help identify promising structures, but drilling is needed to confirm the presence and characteristics of hydrocarbons. Uzbekistan’s Energy Ministry, SOCAR, and Uzbekneftegaz signed a production-sharing agreement covering the six blocks in July 2025. SOCAR was designated the operator. BP joined the project in May 2026, acquiring a 20% interest from each of the two original partners. The British company now holds 40%, while SOCAR and Uzbekneftegaz retain 30% each. The deal marks BP’s return to exploration in Uzbekistan, where it first signed exploration agreements with the same partners in 2018 before withdrawing in 2021. The acquisition coincided with BP’s renewed emphasis on oil and gas investment. The company had previously reduced its exploration portfolio as part of a shift toward low-carbon energy, but subsequently revised its strategy and refocused on its traditional business. When BP joined the project, its regional president for Azerbaijan, Georgia, and Turkey, Gio Cristofoli, said the company saw significant resource potential in Uzbekistan. He said participation in the agreement would expand BP’s exploration portfolio and support its long-term organic growth. For SOCAR, the Ustyurt survey is its largest seismic exploration project outside Azerbaijan. In June, the company reported that more than 80% of the seismic program had been completed and that initial results were providing insights into deeper geological structures. SOCAR announced the completion of fieldwork in July, with data processing expected to finish in the first quarter of 2027. The partners have developed a work plan through 2029. Uzbekneftegaz head Abdugani Sanginov previously proposed accelerating the project and beginning drilling by the end of 2027, but an approved drilling schedule has not been published. Uzbekistan needs to find...

Pharmaceuticals

Kyrgyzstan Pharmaceutical Logistics Complex Begins Construction in Bishkek

Construction has begun in Bishkek on what officials describe as Kyrgyzstan’s first state pharmaceutical logistics complex of its level. The new warehouse is intended to improve the storage and distribution of medicines in a country where imports account for 97% of the market. The complex is being built for Kyrgyzpharmatsiya, a state-owned enterprise under the Ministry of Health that centrally procures and supplies medicines and medical products to public healthcare facilities. It will occupy a 7.1-hectare site. The project will cost 650 million som, or about $7.4 million. The facility will operate in accordance with international Good Distribution Practice, or GDP, standards, which set requirements for the storage, handling, and transportation of medicines to preserve their quality throughout the supply chain. The warehouse will form part of a broader overhaul of Kyrgyzstan’s national pharmaceutical supply system. Established in 2023, Kyrgyzpharmatsiya centralizes orders from public healthcare institutions and enters into direct contracts with manufacturers. Buying in larger volumes is intended to reduce the number of intermediaries and lower procurement costs. A unified state digital platform is also being developed to connect healthcare facilities’ requests with procurement, deliveries, and inventory data. Together with the warehouse, it is intended to provide traceability of medicines from the supplier to the healthcare facility. Funding for medicines and medical products in 2026 is budgeted at 6.8 billion som, or about $77.8 million, compared with 100 million som, or $1.1 million, in 2021. Kyrgyzstan, however, obtains nearly all of its medicines from abroad. Domestic producers account for only about 3% of the market, while medicine imports were projected to reach 34 billion som, or about $389 million, in 2025. This dependence leaves the market vulnerable to exchange-rate fluctuations, border delays, and disruptions affecting foreign suppliers. A domestic logistics center will not reduce the share of imports, but it could reduce storage losses, make it easier to maintain stocks of high-demand medicines, and speed up deliveries to hospitals. Illegal imports remain a separate problem. In November 2025, a Health Ministry official said that 2022 data put the share of smuggled medicines at around 30-40%, an estimate he said remained relevant. The figure is based on older data and should not be treated as a current measure of the market. The new complex addresses an important infrastructure gap, but by itself it does not guarantee lower prices or end shortages. The outcome will depend on procurement planning, contract transparency, and the distribution of medicines from the central warehouse to the regions.

Food Processing

Kazakhstan’s Shin-Line Group Plans Food Industry Cluster With South Korean Support

Kazakhstan’s Shin-Line Group, a food manufacturer best known as Central Asia’s largest ice cream producer, plans to establish a food industry cluster modeled on South Korea’s Foodpolis. Korean specialists will help develop its management model and services for producers seeking to enter overseas markets. Under the agreement, the Korean side will provide consulting and expert support on the cluster’s management and development strategy. Kazakhstan’s Ministry of Agriculture describes it as the country’s first project of its kind. Foodpolis operates in the South Korean city of Iksan. The cluster brings food manufacturers and research laboratories together with centers that help businesses develop and test products. The centers also assist with certification and access to overseas buyers. Shin-Line intends to adapt this system to Kazakhstan’s market. “It is important for us to create not just a standalone site, but an entire ecosystem where producers can access technology and expertise, develop processing, and enter new markets. This is a long-term project, and we are starting by studying and adapting the best Korean experience,” Shin-Line Group President Andrey Shin said in a statement released by Kazakhstan’s Ministry of Agriculture. Shin-Line makes instant noodles and frozen prepared foods in addition to ice cream. Its total production reached 37,000 metric tons in 2025, the company reported. Kazakhstan’s Ministry of Agriculture said Shin-Line exported about 14,200 metric tons of ice cream that year, generating more than $49 million in export revenue and accounting for up to 95% of Kazakhstan’s ice cream exports. Its exports reach ten countries, including Central Asian states, China, Mongolia, and markets in the Caucasus. Korean companies also hope to use Shin-Line’s distribution network to enter Kazakhstan’s market. The two sides discussed placing Foodpolis products in approximately 70 CU convenience stores operating in Kazakhstan. This could give the companies a ready-made route into Kazakhstan’s retail market and, eventually, other Central Asian markets. The agreement continues a series of Asian partnerships for Shin-Line. In September, the company established a joint venture with Japan’s Shigemitsu Industry to develop the Ajisen Ramen chain. The partners plan to open up to 50 restaurants in Kazakhstan and other Eurasian countries between 2027 and 2031. A central kitchen will be established at Shin-Line’s facility in the Almaty Region to supply the network. Kazakhstan aims to increase the share of processed goods in its agricultural exports. In 2025, exports from its agricultural and food-processing sector generated $7 billion, up 37% from the previous year. Processed products accounted for about $3.6 billion. Expanding exports, however, depends on more than production volumes. Businesses also need help developing and certifying products, as well as access to retail networks. Shin-Line wants to bring these functions together in the future cluster.

Green Hydrogen

South Korea’s YPP Considers $2 Billion Green Ammonia Project in Kazakhstan

South Korea’s YPP Corporation is considering building a green hydrogen and ammonia complex in the East Kazakhstan Region at an estimated cost of $2 billion. The project, outlined in a memorandum signed during President Kassym-Jomart Tokayev’s visit to South Korea, could produce up to 55,000 metric tons of green hydrogen or 310,000 metric tons of green ammonia annually. Green ammonia is made by combining nitrogen with hydrogen produced using renewable electricity. Most ammonia is currently used to make fertilizer, but it is also being developed as a low-carbon fuel and as a way of transporting hydrogen, which is more difficult and expensive to move over long distances in its pure form. For South Korea, which depends heavily on imported energy, ammonia is part of a wider effort to reduce emissions from power generation and industry. Its latest electricity plan envisages clean hydrogen and ammonia supplying 6.2% of electricity generation by 2038. Kazakhstan’s Ministry of Energy, the regional authorities, and YPP signed a memorandum covering cooperation on the Green Energy Complex project. It envisages around 1 GW of renewable generation, including wind and solar power. The Ministry of Energy says the project would proceed if it proves economically viable. YPP, a South Korean energy engineering company, signed a framework agreement with Kazakh Invest to develop the Green Energy Complex in July 2025. The project was initially conceived on a larger scale. A 2025 proposal envisaged investment of up to $3.1 billion and 2 GW of renewable power, with annual hydrogen production of as much as 75,000 metric tons. Under the latest version, the estimated cost is about $2 billion, with renewable capacity of around 1 GW. Hydrogen production is now projected at up to 55,000 metric tons a year, while planned ammonia production remains unchanged at up to 310,000 metric tons. Kazakhstan has some obvious attractions for such a project: ample space for large renewable-energy developments and an established industrial base. East Kazakhstan is one of the country’s main metallurgical and power-producing regions. It also contains a significant share of Kazakhstan’s water resources, an important consideration because producing green hydrogen by electrolysis requires both electricity and water. The harder question is whether Kazakhstan can turn those advantages into ammonia that is competitive on international markets. Green ammonia remains substantially more expensive to produce than conventional ammonia. The International Energy Agency estimated in 2025 that ammonia made using electrolysis cost about three times as much on average before policy support and carbon pricing were taken into account. Competition for Asian buyers is also growing. Samsung C&T, which was named in 2025 as a potential buyer for the project in Kazakhstan, signed a binding 15-year agreement with India’s Reliance Industries in March 2026 for green ammonia produced in India. The deal is worth more than $3 billion, with supplies due to begin in the second half of fiscal year 2029. Kazakhstan also faces a geographical disadvantage. The country is landlocked, and ammonia produced in East Kazakhstan for South Korea or other overseas markets...

Jewelry Industry

Kazakhstan’s Jewelry Market Faces New Rules on Gold and Hallmarking

Kazakhstan produces and exports billions of dollars’ worth of gold, yet officially recorded domestic jewelry production amounted to just $7.2 million in 2025. The government now plans to tackle the gray areas of the market, from the origin of gold used by workshops to scrap from pawnshops and mandatory hallmarking of jewelry. According to the Ministry of Industry and Construction, the domestic jewelry market was worth about $168 million last year, up 3.4% from 2024. But market participants say that a significant share of trade in precious metals and jewelry remains outside the formal economy. The contrast is particularly striking given Kazakhstan’s position as a major gold producer and exporter. According to international trade statistics for 2025, Switzerland imported more than $1.1 billion worth of unwrought and semi-manufactured gold from Kazakhstan, the United Kingdom about $561 million, and Azerbaijan about $262 million. Together, those three destinations alone accounted for nearly $2 billion. Kazakhstan’s own reported export figures under the same trade category were considerably lower, highlighting a substantial discrepancy between the two sets of customs data. The path gold takes from extraction to a local jewelry workshop remains one of the industry’s weak points. Deputy Prime Minister and Minister of National Economy Serik Zhumangarin said jewelers need a legal and affordable source of raw material. “We have major jewelry centers, and it is important to preserve this heritage and bring as much of the industry as possible into the legal economy,” Zhumangarin said, citing the importance of giving jewelers access to legally sourced gold. Pawnshops are another part of the gray market. In 2025, they sent about 3.2 metric tons of precious-metal scrap and waste to Tau-Ken Altyn for processing, down from 3.8 tons a year earlier. Tau-Ken Altyn operates a major precious-metals refinery in Astana. Refining involves purifying mined or recycled metal to a high degree of purity. The government is now considering requiring jewelry scrap and waste to be transferred to refiners. The authorities also want to revise the rules governing its acceptance and subsequent sale. The exact size of the shadow market is unknown. In 2024, Kaysar Zhumagaliyev, head of Kazakhstan’s League of Jewelers, said as much as 99% of the market was operating in the shadows. The association estimated the gray market at approximately $850 million to $960 million a year, using the average exchange rate for 2024. Zhumagaliyev linked it to underground workshops, smuggling, and gold purchases outside official channels. The government’s latest figures offer a more cautious picture, but they clearly illustrate the gap between registered businesses and the control system. In 2024, only 45 market participants submitted jewelry for mandatory hallmarking. In 2025, that number rose to 959. Tax authorities count 3,520 taxpayers working with jewelry, meaning that about 27% of them submitted products for mandatory hallmarking last year. A hallmark certifies the fineness of the precious metal and indicates that a piece has passed through the legal control system. The procedure therefore provides the authorities with one of the few measurable indicators...