Audit Chamber Warns of Depleting Mineral Reserves and Inefficiencies in Kazakhstan’s Subsoil Sector

Explored reserves of natural resources in Kazakhstan are gradually being depleted, while some of the deposits that authorities rely on exist only on paper, Orda.kz reports.

The Supreme Audit Chamber (SAC) summarized the results of inspections in the field of geological exploration and subsoil use. Auditors noted that mineral extraction currently accounts for over 20% of Kazakhstan’s GDP.

Key resources contributing to national income include uranium, gold, iron ore, copper, and zinc.

However, questions arise about whether Kazakhstan’s mineral wealth is as abundant as often claimed — or whether some resources exist only on paper and are difficult or impossible to extract.

Against the background of the depletion of confirmed resources, a high share of so-called 'paper' resources is noted, when reserves are preliminarily estimated, but not confirmed and not involved in economic turnover. One of the reasons for the decrease in the growth of reserves is the lack of adequate funding for geological exploration of the subsoil. Despite the introduction of a licensing system of exploration rights, low investment activity of subsoil users remains, the SAC report says.

The Ministry of Industry and Construction failed to digitize geological data and establish a digital information bank. It also did not succeed in increasing private investor engagement in digitalization efforts.

Kazakhstan currently lacks modern laboratories needed for such work.

Due to the lack of control on the part of the Geology Committee and the contractor's poor performance of contractual obligations, the state paid for uncompleted work on digitizing geological materials in the amount of 68.2 million tenge.

Additionally, the Ministry allowed subsoil users to alter their work programs without mandatory tax expertise. As a result, companies interpreted the legislation independently and avoided taxes under legal pretexts.

In total, auditors identified 81 procedural violations and 16 systemic deficiencies in the geological exploration sector.

Original Author: Nikita Drobny