Geopolitical risk, unstable legislation, corruption and bureaucracy are the main reasons that disadvantage the investment attractiveness of the Republics of Central Asia.
Said Sultanov (pictured first right) together with his team of specialists and associates, is the Chairman of the Supervisory Board of the Aurora Minerals Group LLP who recently came back from the International Mining Convention PDAC 2017, which completed its work in Canada.
About 25 thousand of participants from 125 countries were present at this event. In his interview for abctv.kz, Mr. Sultanov shared his vision of the current situation in geological exploration around the world.
"We have met with representatives of 50 companies, in particular, with majors and juniors listed on the Toronto Stock Exchange (TSX-V), a law firm specializing in listing, with stock brokers, investment banks, consultants, and leading service companies. This made it possible to draw some conclusions, both positive and negative, “said Said Sultanov.
In his opinion, the market of geological exploration in the mining industry is on the rise today. The most important thing is that there is money, and the money is being invested into projects at exploration, prospecting and evaluation stages.
- Why, in your opinion, the investors are not eager to come to Kazakhstan? Whereas, the government is ready to provide all the geological information, as well as it takes targeted steps aimed at reduction of bureaucratic delays in documents preparation.
- Kazakhstan in terms of investment attractiveness is not interesting to potential investors particularly. Moreover, foreign companies will prefer to invest in Mongolia, Chile, Peru or Botswana, Namibia, rather than in Kazakhstan, Uzbekistan or Turkmenistan.
The main reasons are geopolitical risks, unstable legislation, corruption and bureaucracy. Thus, the internal situation in the geological sector of Kazakhstan in connection with the arrest of the Chairman of the Committee of Geology, which has not gone unnoticed, has cast-off Kazakhstan, as the market, for several years back in terms of reputation.
However, we have been approached by the people who conduct business in Kazakhstan, as well as by those who plan to enter our market. They were interested in the prospects of the industry. It should be noted that ore geology of Kazakhstan, Uzbekistan and Russia is one of the most prominent, and from the professional point of view there is a hypothesis that the largest gold deposits can be located here.
- Are the conditions offered by Mongolia, for example, are indeed more attractive than conditions in Kazakhstan?
- At the exhibition, we met with six Canadian companies who have their assets in Mongolia. The shares of their companies are in demand on the Toronto Stock Exchange.
During the speech of an official from Mongolia, I found out that they have about 2,000 licenses in the field of solid commercial minerals, whereas we have only 500. That is, four times less.
If earlier it seemed to me that we need to be equal to Australia and Canada in the mining sector, and these countries are certainly the best, I think now, if we reach the level of at least Mongolia in the next five years, it will be a success.
We can do business as before, and be on the sidelines of the global geological prospecting, or we can start learning from our mistakes and try to make sure that we have 2000 licenses for geological prospecting. For example, in terms of taxes, it is better to have 20% from 2,000 licenses than 40% from 500 licenses. Here is my opinion and vision for solving the problem of creating conditions better than in Mongolia.
- But recently, as it is known, the government has done a lot to improve the law "On Subsoils and Subsoil Use". In your opinion, what else the attention should be paid at in order to attract the investors?
- The Code "On Subsoils and Subsoil Use" is of great importance. When we mentioned that our code was based on the Australian code, everyone nodded in agreement.
However, we have the issue of creating a geological data bank and provision of geological information. It should be resolved as soon as possible. Analysis and processing of data around the world is already being done by artificial intelligence, whereas we are only talking about the need for this.
Within the framework of the conference, we have met with the representatives of companies - juniors who have medium size "greenfield" exploration projects in Eastern Europe.
They have performed some volume of geochemical research and are already listed on the Toronto Stock Exchange. The capitalization of such companies varies from 10 to 20 million dollars.
This trip, once again convinced us in the importance of access to capital markets. We need successful companies – juniors, listed on the stock exchange. Then they would facilitate that Kazakhstan companies would find financing in the international capital markets. This is the best mechanism to improve our investment attractiveness.
Another important point. Service companies are more loyal to Kazakhstan, as due to fierce competition they have to find new markets for their services and goods. We signed several agreements with Canadian and Australian companies.
In my opinion, the more advanced service companies are in Kazakhstan, the faster our staff will learn to work with modern equipment. In addition, our local service companies will have to grow due to such competition.
- What else would you like to say after participation in the exhibition?
- With all my respect to our officials, I believe that it is necessary to prohibit visiting such international exhibitions, at budget cost for those who do not speak English. Once again, I will have Mongolia as an example: all presentations were in English, the questions-answers and the discussion sessions were in English.
The problem is that a person who does not speak the language is not interested in the exhibition, lectures and communication. This gap is compensated by expensive purchases and drinking in the restaurants.
If three years ago there was a delegation including English-speaking professionals, then our industry would have been much more advanced.
We came to Canada at our own expense, but it was worth it. We plan to exhibit our own stand next year. Moreover, I think Kazakhstan should annually exhibit its stand along with other local companies.
Today, the leadership of the geological sector of our republic are young talented professionals who have the strength, desire and levers of influence to change the situation in our favour and make the industry the most advanced.
The mining complex of Kazakhstan can become our leader with the proper approach. Considering the fact that metal prices have returned to pre-crisis levels, we will be able to ensure the long-term growth of our economy as a whole and provide hundreds of thousands of jobs.
