Tag Archives: Kazakhstan

Russia’s Polymetal buys more Kazakh gold

ALMATY, APRIL 4 2016 (The Conway Bulletin) — Russian miner Polymetal continued its shopping spree in Kazakhstan buying gold miner Orion Metals, a company owned by Glencore’s subsidiary Kazzinc, for an initial $100m.

Orion Metals owns the Komarovskoye Gold Deposit, which lies 150km south of Polymetal’s Varvarinskoye field in north-east Kazakhstan.

“Komarovskoye has long been in our sights as a natural close fit for our Varvara hub,” Vitaly Nesis, CEO of Polymetal, said in a statement.

“We are very excited about the transaction which is expected to strengthen production profile, lower costs, and provide substantial incremental cash flows at Varvara in the near term.”

Varvara is a reference to Polymetal’s Varvarinskoye field.

Polymetal said Komoarovskoye, the gold field that Orion Metals owns, holds 43.5 tonnes of gold.

The deal with Kazzinc could reach $180m through the payment of royalties, if gold prices rise significantly.

In the past six months, Polymetal acquired companies and fields connected or close to its operations in both Kazakhstan and Armenia, in an effort to build production hubs.

Last November, Polymetal upgraded the size of its gold reserves at the Kyzyl project by 8% to 29.2m tonnes.

In 2015, it had bought the Kyzyl project for $620m from Sumeru, a private group owned by Timur Kulibayev, son-in-law of Kazakh President Nursultan Nazarbayev.

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(News report from Issue No. 275, published on April 8 2016)

Panama papers reveal Kazakh, Azerbaijani, Georgian offshore accounts

APRIL 3 2016 (The Conway Bulletin) – A massive leak of documents from the Mossack Fonseca law firm based in Panama showed that government leaders and businessmen around the world have been using offshore tax havens to shelter assets and cash. Included in this list were Azerbaijani President Ilham Aliyev’s family, Georgia’s former PM Bidzina Ivanishvili and the grandson of Kazakh President Nursultan Nazarbayev.

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(News report from Issue No. 275, published on April 8 2016)

Editorial: Kazakh and Kyrgyz de-dollarisation

APRIL 8 2016 (The Conway Bulletin) – Central Banks in Central Asia are boasting about de-dollarisation these days, painting a rosy picture of their success in combating their economies’ dependence on the greenback.

A closer look at the stats, however, reveals that a combination of heavy interventions in the currency markets and interest rate tweaking were the main drivers of healthier Kazakh tenge and Kyrgyz som.

But now Central Banks have to grapple with inflation, which continues to grow, and demand for credit, which continues to shrink.

Central Banks propped up local currencies, against a US dollar that has now slowed its rise against Emerging Markets currencies and commodities.

Restrictions on exchange points, bans on pricing goods in dollars and public calls for confidence have all contributed to curbing the use of dollars.

But Central Banks might have run out of options now and they need to steer away from “crisis mode” if they want to really restore confidence in their still ailing currencies.

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(Editorial from Issue No. 275, published on April 8 2016)

Kazakh oil company finalises agreement with Vitol

APRIL 4 2016 (The Conway Bulletin) – Kazakhstan’s state-owned oil company, Kazmunaigas, said it finalised an agreement it signed in December with Switzerland-based oil trader Vitol. The deal will allow Vitol to buy oil from Kazmunaigas for an advance payment of up to $3b. The press service of Samruk Kazyna, the sovereign wealth fund that owns Kazmunaigas, said the deal will last for four years.

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(News report from Issue No. 275, published on April 8 2016)

Kazakh Central Bank says that confidence in tenge has returned

APRIL 5 2016, ALMATY (The Conway Bulletin) — Kazakhs have increased the amount of tenge they are keeping in bank accounts, suggesting that they now trust the currency once again despite it halving in value over the past seven months, Kazakhstan’s Central Bank said.

In February, Central Bank data showed that the amount of tenge saved in banks rose to 1.53 trillion tenge ($4.5b), up 5% from January. Significantly, too, the proportion of tenge as savings grew to 22% of the total, up from 20% in January.

Analysts said that two factors had contributed to this renewed confidence in the tenge. The first was that this year, the tenge has actually strengthened against the US dollar to around 340/$1 compared to an all- time low in mid-January of 390/$1.

In March, Kazakhstan’s Central Bank heavily intervened in the currency market, buying $1.2b on the Kazakh Stock Exchange, around 2.6 times more than it bought in February.

This, together with high liquidity ensured by capital held at the Single Pension Fund, helped to improve the tenge’s position, analysts said.

“The Central Bank now faces the problem of too much liquidity and too high interest rates,” Askar Akhmedov, senior analyst at Halyk Finance, part of one of the largest Kazakh banks, said in a report.

Secondly, analysts said the Central Bank’s policy of increasing interest rates on tenge savings in banks to 14% from 10%, in addition to dropping the interest paid on foreign currency savings to 2% from 3% was working.

On the streets of Almaty this more positive view of the tenge was, generally, reflected.

A pensioner said: “It is our national currency, and I trust it but the 50% drop in its value was unpleasant, especially for pensioners.”

Most people that the Bulletin’s correspondent in Almaty spoke to agreed, and it will be a relief to President Nursultan Nazarbayev and the Kazakh government that confidence in the tenge is returning after a torrid 2015.

There were some who took a more cautious approach, though.

“Nowadays the position of the tenge is unsteady and it may weaken again. If I had to choose between tenge and dollar to put money in deposit, I’d probably choose dollar,” said Aigerim, a music teacher.

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(News report from Issue No. 275, published on April 8 2016)

Oil export ban is illogical, says ex-Kyrgyz official

APRIL 1 2016 (The Conway Bulletin) – For the past six years, there has been an informal ban on petroleum exports from Kazakhstan to Kyrgyzstan, former president of Kyrgyzstan’s Oil Traders Association, Zhumakadyr Akeneyev, said at a conference in Bishkek. According to him this practice is illogical within the framework of the Eurasian Economic Union and it has caused a rise in illegal trading. Kyrgyzstan imports almost all its petroleum products from Russia.

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(News report from Issue No. 275, published on April 8 2016)

Kazakh businessman to chair KazKom

APRIL 1 2016 (The Conway Bulletin) – Kenes Rakishev, a businessman favoured by the Kazakh political elite to front companies they are linked with, was nominated to become chairman of Kazkommerts- bank. Mr Rakishev, 36, has steadily increased his stake in Kaz- kommertsbank over the past couple of years. He led the merger between Kazkommertsbank and BTA Bank which was riddled with debt. Analysts said that the merger of Kaz- kommertsbank with BTA Bank was driven as much by politics as it was by business motives.

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(News report from Issue No. 275, published on April 8 2016)

Kazakhstan’s KMG EP ditches dividend payout for the first time

ALMATY, MARCH 31 2016, (The Conway Bulletin) — KMG EP, a subsidiary of Kazakhstan’s state-owned Kazmunaigas, said it will not pay dividends this year for the first time in a decade, reflecting the impact of low oil prices on the company.

KMG EP had paid dividends each year since its IPO on the London Stock Exchange in 2006.

“The board of directors has recommended not to pay dividends on ordinary shares,” the company said in a statement.

“The decision not to pay dividends is caused by a sharp decline in oil prices since the end of 2014, as a result of which the company’s cash flow and operating profit turned negative.”

The board decided to override an earlier recommendation from the company’s independent directors to pay out dividends this year.

KMG EP’s revenues collapsed by 37% in 2015. Oil prices have fallen from around $120/barrel in June 2014 to around $40/barrel now. Earlier this year oil cost less than $30/barrel.

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(News report from Issue No. 274, published on April 1 2016)

BPC Engineering and Kazakh gov. make turbine deal

MARCH 29 2016 (The Conway Bulletin) – BPC Engineering, the Russian distributor of California-based Capstone Turbine, said it reached an agreement with the Kazakh government to supply seven micro-turbines for the Beineu-Shymkent gas pipeline. Around 50 micro-turbines are needed in the pipeline, part of a $3.5b project to pump gas from west to south Kazakhstan.

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(News report from Issue No. 274, published on April 1 2016)

Kazakhstan releases activists

MARCH 30 2016 (The Conway Bulletin) – A court of appeal in Kazakhstan suspended prison sentences handed out to two Kazakh activists in January. Yermek Narymbayev and Serikzhan Mambetalin, imprisoned for posting messages on Facebook that the authorities said spread racial hatred, were released from prison and put under house arrest. Human rights activists saw this as a conciliatory move towards the EU ahead of President Nursultan Nazarbayev’s visit to Brussels.

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(News report from Issue No. 274, published on April 1 2016)