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A WEEKLY ONLINE PUBLICATION / WWW.MFA.GOV.KZ ISSUE NO. 343

Kazakhstan Makes History at Sochi Games with Figure Skating Bronze

Also In The News

Samruk Kazyna Announces Focus on Kazakhstan Way 2050

Rare Earths: A Rare Opportunity for Kazakhstan

Samruk Kazyna Announces Focus on Kazakhstan Way 2050

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Kazakhstan Makes History at Sochi Games with Figure Skating Bronze Despite a lower medal count than they would have liked, Kazakhstan still made history at this staging of the Winter Olympics with skater Denis Ten’s bronze medal finish in the men’s individual figure skating competition in Sochi.Kazakhstan sent 52 athletes to the Sochi Winter Olympic Games with a few serious medal contenders among them, including Asian Winter Games gold medal winners Denis Kuzin (speed skating), Dmitry Reiherd (ski moguls), Alexey Poltoranin (cross-country skiing) and Ten.

The country has medalled in past games in the biathlon, cross-country skiing and speed skating, and Kuzin, Reiherd and Poltoranin would give some of Kazakhstan’s best performances in the games, but only Ten ended up cracking the top three and bringing back a medal.

Ten, a serious world figure skating competitor, carried the burden of national high hopes while competing in a strong field that included figure skating great Evgeny Plushenko skating on home ice. The Kazakh skater seemed to have had his medal dreams dashed after his short programme left him in ninth place. But weak performances by some top contenders, including 2012 World Champion Daisuke Takahashi, plus an impressive free programme, vaulted the 20-year-old to the podium after all. Ten finished behind Patrick Chan of Canada and Yuzuru Hanyu of Japan who won Japan’s first men’s individual figure skating gold.

“This was a big gift for me,” said Ten, who has been competing internationally since he was 13, of his medal after his performance. For bringing home the bronze, the skater will receive $75,000 from Kazakhstan’s National Olympic Committee.

The next best results for Kazakhstan were fifth. Reiherd took one fifth place in the men’s freestyle ski moguls competition. Kazakh freestyle skiing coach Victor Lemeshko called Kazakhstan’s freestyle skiing performances “excellent,” in an interview with Sports.kz, despite finishing out of medal contention. He called the judging in Sochi “a big psychological blow ... for the coaching staff and the athletes.”

There have, as usual, been some judging controversies in the games, particularly in the women’s figure skating competition. However, International Olympic Committee Head Thomas Bach said in an interview with the Associated Press on Feb. 22 that there had been no complaints filed by athletes about the games. This is despite much mockery by Western media at the start of the games about the games’ facilities and Russia’s preparedness.

The team of Abzal Azhgaliyev, Aydar Bekzhanov, Denis Nikisha and Nurbergen Zhumagaziyev got Kazakhstan’s second fifth place result in the men’s short track speed skating 5,000 metres. Skater Kuzin came in seventh in the men’s 1,000 metres and ninth in the men’s 1,500 metres. Cross-country skier Alexey Poltoranin, who took two bronze medals at the 2013 cross-country world championships and who won gold in the 2010 World Cup, came in eighth with Nikolay Chebotko in the men’s team sprint and ninth in the 15 kilometre classic. Skier Pavel Kolmakov was 10th in the men’s moguls competition, rounding out Kazakhstan’s top-ten finishes. The women’s biathlon 4x6 kilometre relay team finished 12th, a result generally considered disappointing.

Kazakh athletes also competed in luge, snowboarding, ski jumping, alpine skiing and the individual biathlon and men’s biathlon relay. The team overall took 26th place out of the 88 nations that took part in the games.

Overall, Russia, competing on home soil, brought home the most medals of these games, winning 13 gold and 33 overall. Russia’s performance exceeded expectations, beating the USSR’s former record medal count and tying its gold medal count. Team Russia was followed by the United States (28 medals, nine gold), Noway (26 medals, 11 gold) and Canada (25 medals, 10 gold).

Kazakh President Nursultan Nazarbayev (left) and Kazakhstan Agency for Sports Chairman Tastanbek Yessentayev (right) meet with Kazakh team athletes before the Sochi Olympics

Kazakhstan Figure Skater Denis Ten performing the programme that won him bronze in Sochi

Samruk Kazyna Announces Focus on Kazakhstan Way 2050 National Welfare Fund Samruk Kazyna announced at a Feb. 26 meeting of fund companies attended by Kazakhstan Prime Minister Serik Akhmetov that it will focus in 2014 on implementing the elements of the Kazakhstan Way 2050 strategy laid out in Kazakh President Nursultan Nazarbayev’s latest state-of-the-nation address.

“This year we will focus on implementation of the tasks set in the Kazakhstan Way 2050 state-of-the-nation address and on achievement of the goal of becoming a strategic holding company,” said Samruk Kazyna Board Chairman Umirzak Shukeyev.

According to Shukeyev, in order to implement the President’s tasks to transfer state-owned enterprises to the private sector, the fund in the first quarter of 2014 will submit to the government a list of Samruk Kazyna companies proposed for transfer to the private sector. According to preliminary data, the list is expected to include more than 80 companies.

When selling shares in subsidiaries and affiliated companies, the fund intends to attract strategic and portfolio investors and move them on the stock market, including within the People’s IPO programme. Shukeyev stressed that the fund together with the government within one month will also make proposals for further implementation of the People’s IPO programme.

The fund also intends to complete the withdrawal of remaining non-core assets and facilities from the group. “In 2014-2015, we plan to remove 75 assets and facilities. In general, this withdrawal will enable us to get rid of the loss of 5.7 billion tenge (US$30.8 million). The relevance of keeping in the companies 156 non-core assets will also be revised,” he said.

Another important direction of work will be the deployment of the Fund Transformation Programme, transitioning from its current model of work as an administrator of the transferred state assets to an active investor’s role.

“World practice shows that the leaders of such national welfare funds as Khazanah, Temasek, Mubadala pass through this stage of evolutionary development and become active investors in order to maximise its value for shareholders,” Shukeyev explained.

According to Shukeyev, the essence of the fund’s activity is to focus on two areas: the first is an increase in income from the established companies through improving the operational efficiency of businesses all levels. The second is directing income toward portfolio expansion through the development of startups and new directions.

Samruk Kazyna also intends to change its approaches in investment activities and increase the proportion of debt capital in the financing of projects from the current 54 percent to 70 percent. Overall, in 2014 the fund plans to complete 18 investment projects worth $3.3 billion, while under the State Programme of Accelerated Industrial and Innovative Development (SPAIID) six projects are slated for completion in 2014.

The meeting also looked at the fund’s 2013 performance and announced that the fund’s 2013 activities showed positive results in key financial performance indicators.

The fund’s initiatives implemented in 2013 led to an increase in equity of the fund’s companies to a total of $52.5 billion, a 12 percent increase over 2012. The key performance indicator (KPI) of operating earnings (EBITDA margin) also increased from 19.3 percent in 2012 to 20.5 percent in 2013. And net profit excluding second tier banks rose from $3.4 billion in 2012 to $3.5 billion in 2013.

Other 2013 fund successes included the implementation of programmes to withdraw non-core assets, reduce costs, centralise treasury functions and implement e-procurement systems. In line with the President’s tasks of 2013, the fund left the capital of second tier banks, signing all transactional documents on the sale of Temirbank, BTA Bank and Alliance Bank shares.

Samruk Kazyna also transferred to the state ownership Baiterek National Managing Holding, Development Bank of Kazakhstan and KazExpo Garant.

Kazakhstan Prime Minister Serik Akhmetov welcomes participants to a meeting of National Welfare Fund Samruk Kazyna companies on Feb. 26

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Rare Earths: A Rare Opportunity for Kazakhstan The global market for rare earth elements used in the production of cell phones, flat screens, electric cars and other technology is valued at $3-5 billion and demand is expected to double by 2020. And some say Kazakhstan is in a prime position to capitalise on this rising global market.

Rare earth elements (REEs), or rare earths for short, are divided into two subgroups–Heavy Rare Earths (HREEs) and Light Rare Earths (LREEs). Both are commonly produced from uranium tailings, byproducts of uranium mining. And Kazakhstan happens to be the world’s largest uranium producer.

“According to our estimates,” said Vladimir Shkolnik, chairman of the board of Kazakhstan’s state-owned company Kazatomprom, one of the most significant producers of nonfuel mineral commodities in the country, “Kazakhstan’s resource base is rich in heavy earths. The global demand for heavy earths will remain high and that gives us a competitive advantage.”

It is not only Kazakh industry experts, however, who are optimistic. Jack Lifton, a founding principal of Technology Metals Research LLC, Senior Editor at InvestorIntel and one of the world’s leading authorities on rare earth elements agrees that Kazakhstan could be in a strong position to capture significant market share.

“Kazakhstan already produces uranium. A lot of it. They should be able to recover heavy earth from uranium residue,” said Lifton.If Kazakhstan can produce large volumes of rare earth elements, says Lifton who consults, writes and lectures on the market fundamentals of REEs, then they will be well-positioned to meet demand, particularly coming out of East Asia.

Dudley Kingsnorth, a professor at the Centre for Research in Energy and Minerals Economics at Curtin University in Perth, Australia and an analyst at Industrial Minerals Company of Australia (IMCOA), a rare earths consulting company, expects the average market price for REEs in the long-term to increase to $50-70 per kilogram from the current averages of $30-40 per kilogram, driven by a strong demand for heavy earths.

Part of that increased demand and another reason Kazakhstan may be in a strong position to capitalise on the rare earths market is that China’s share in rare earths’ global supply and demand has been steadily declining. China is still very much in control of the market, accounting for 85 percent of global production and 65 percent of global demand, according to IMCOA. But China announced in 2010 that it would curtail its production of rare earths and cut export quotas by as much as a third. As a result, global prices skyrocketed and 90 percent of small mines went out of business.

Prices leveled slowly in 2012. China’s export cuts, however, presented challenges for importers of rare earths like Japan (the world’s largest importer of REEs), but also created opportunities for other markets. As a result, output from the rest of the world will increase tenfold by the year 2016, projects IMCOA. The increase in output outside of China will come from mineral-rich countries like Kazakhstan.

“Kazakhstan, given its geographical proximity to China and rich resource base, is in a great position to build this vertical supply chain. It would raise its economic and political profile in the region,” said Lifton.

In November 2012, Kazatomprom and Japan’s Sumitomo Corporation opened a facility in Stepnogorsk, an industrial city 170 kilometres north of Astana, to produce rare earth oxides with a projected capacity of 1,500 tonnes a year. Kazatomprom is planning to establish a REEs-based vertically-integrated production chain at this state-of-the-art facility designed by Kazakh, Japanese and European engineers.

Both France and Germany have signed long-term strategic partnership agreements with Kazakhstan securing a source of rare earths for the countries’ industrial needs.

Increasingly, customers around the world will be turning to technology that includes a little bit of Kazakhstan.

Kazatomprom Chairman Vladimir Shkolnik (right) and Sumitomo Corporation Representative Director and Senior Managing Executive Officer Toru Furihata open a SARECO plant in Stepnogorsk in November 2012

The SARECO plant in Stepnogorsk

Also In the News... • MayorofAstanaImangaliTasmagambetovbriefsPresidentonAstana’sdevelopment

Mayor of Astana Imangali Tasmagambetov briefed President Nursultan Nazarbayev on Feb. 24 concerning the capital’s development and prospects. The capital is growing physically and economically, the mayor reported, with about 78,000 people applying for permanent residence in the capital last year and more than 1 million square metres of housing built in 2013. There are plans to build 100 preschool institutions by 2020 to accommodate the city’s children and to eliminate three-shift education. The President noted that the growth of industry can be observed in the structure of Astana’s economy and that investment was being paid off in revenue to the capital budget. The President was also interested in development projects that would make Astana more convenient and comfortable for citizens and guests. He ended the meeting by giving Tasmagambetov specific instructions regarding the topics discussed. (akorda.kz)

• Astana airport to be rebuilt, other infrastructure created by 2017Astana’s international airport is to be rebuilt by 2017 when the country will host EXPO 2017, the Astana akimat’s (mayor’s) press service reported. “Along with the expansion of technical and production capacities, the passenger terminal of the airport will be reconstructed and its floor area increased to 30,000 square metres,” the press statement said. As the country is preparing for a huge amount of visitors, many transportation options are being refurbished or developed. Two new bus terminals are to be created by 2017, as well a railway station. The akimat also said that transport within Astana is a priority. The city is introducing a Bus Rapid Transit system in which buses will use designated, separate lanes to move at speed around the city. Construction is expected to begin soon and end in 2016. It also plans to create more convenient bus routes for other public buses. (ortcom.kz)

• Toyota to start car production in Kazakhstan in spring 2014 Toyota Fortuner SUVs will be produced in Kazakhstan starting in April, said First Vice Minister of Industry and New Technologies Albert Rau at a recent Central Communications Service briefing. The cars will be produced in Kostanay. Toyota spokesman Keisuke Kirimoto has said that production in 2014 is expected to be about 3,000 vehicles. At the briefing, Rau said he hopes by 2019 to reach production levels of 200,000 cars per year. Toyota brand vehicles have grown in popularity in Kazakhstan, with sales increasing by 45 percent between 2012 and 2013. The price of a domestically produced Fortuner is expected to be about $40,000. “We have no short-range plans to build other Toyota models in Kazakhstan,” Kirimoto said. “But if the appetite for the Kazakhstan-made Toyota Fortuner rises, we will probably consider ways to put onstream production startups of Toyota’s Corolla, Camry and Land Cruiser Prado models.” (kazworld.info, news.nur.kz)

• PresidentNazarbayev,BombardierPresidentBeaudoindiscusscompany’sprospectsinKazakhstanKazakhstan is ready to advance the issues of nuclear disarmament and non-proliferation within the UN Security Council, its Foreign President Nursultan Nazarbayev met with President Pierre Beaudoin of Bombardier, the plane and train manufacturer from Montreal, to discuss the company’s prospects in Kazakhstan as the country expands its transport services. During the meeting, Nazarbayev noted that Kazakhstan plans to create a new domestic airline, Air Kazakhstan, for domestic flights, and said that, in addition to the new company and new aircraft, Kazakhstan was particularly interested in cooperating in training pilots, as well as specialists to work at maintenance centres. He said that opening a regional Bombardier office in the country would help increase cooperation and joint activity. “We are ready to work together to improve the quality of transport services and improve the transport sector of Kazakhstan as a whole,” said Beaudoin in the meeting. He said that supplying aircraft would only be a small part of the company’s work in Kazakhstan, and that they also planned to introduce new technologies, teach Kazakh pilots and specialists and apply Bombardier’s experience to a long-term partnership. (akorda.kz)

• Kazakhstudentsproducenewcheaper,low-pollutionwaterfilterA filter for purifying up to 100 cubic metres of drinking water using nanostructured minerals has been developed at the Al-Farabi Kazakh National University Science and Technology Park by Kazakh students. The developers, students Assylbek Aimurzayev, Nikolai Kiyashko and Bagdad Satybaldiyev, under the tutelage of candidate of chemical sciences Bolat Uralbekov, have created one of the first such filtering devices to be produced in Kazakhstan. The team wanted to eliminate heavy metals from water using natural minerals. Their device uses local raw materials and can purify water from pre-cleaning to the final purification stage. It is much cheaper than using activated carbon, a current commonly used filtration material. (astanatimes.com)

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• “TotheStarsFromBaikonur”monographaboutKazakhstan’sspacepresencepresentedinItalyThe monograph, “To the Stars from Baikonur,” was presented at the Gianni Caproni Museum of Aeronautics in Trento on Feb. 22. The publication was presented by the Vox Populi Research Centre, the Gordian Knot Centre of Geopolitical Studies and the Embassy of Kazakhstan in Italy and contains articles, interviews and analyses by Italian experts on space studies and Kazakhstan’s space experience. Representatives of the Italian Space Agency and National Research Council, as well as prominent scientific and cultural figures, were present at the event. Kazakhstan’s ambassador to Italy, Andrian Yelemessov, emphasised Kazakhstan’s pragmatic and rational approach to space in his speech at the event, and said systems currently under development have been chosen because they are relevant to the the most urgent development issues in the country. Italian representatives noted Kazakhstan’s major role in space exploration as the home of Baikonur, and said that the country’s economic growth heralded a new age of development in space programmes. (mfa.gov.kz)

• KazakhgymnastsecuresYouthOlympicslotat13thJuniorRhythmicGymnasticsAsianChampionshipsinMalaysiaKazakhstan’s young rhythmic gymnasts have come up big in the 13th Rhythmic Gymnastics Asian Championships in Kuala Lumpur. Yelizaveta Mainovskaya was named absolute champion of the individual tournament, securing her a place at the Youth Olympic Games in China this year. Youth Olympics slots are given to the top four in individual tournaments and the winners of the group tournament. Mainovskaya, along with Anna Maximova and Veronika Lysogor, took silver in the team tournament, while Amina Kozhakhat, Nurai Kumarova, Aliya Moldakhmetova, Viktoriya Guslyakova and Olesya Kolysheva won bronze medals in the group tournament. Seventy-eight athletes from Asia took part in the championships. (ortcom.kz)

• HolidayssetforMarch8-10,21-25Kazakhstan’s March holidays will last a total of eight days. The weekend of the 8-10 of March will be a holiday, followed by the Nowruz holiday from Friday, March 21 to Tuesday, March 25. (news.nur.kz)

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