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An exclusive interview with “NP” featuring Said Sultanov, head of Aurora Minerals Group, on the current state of domestic geological exploration.
— Mr. Sultanov, in your first interview with “NP” you spoke about serious problems within the authorized body — the National Geological Service (NGS). You discussed how licenses mysteriously “disappear” within the agency’s offices, how there’s no continuity of accountability among officials toward investors, and how all of this stems from a shortage of qualified personnel.
— Life keeps proving the truth of the well-known saying “cadres decide everything.” The shortage of personnel — people who know the industry and are invested in results — keeps creating new problems. Given the ambitious task facing the country in searching for new deposits of critical minerals, beyond the staff shortage, we unfortunately lack experience supporting complex investment projects specifically in this industry. As a result, situations arise where deal approvals take far longer than investors expect. This is especially sensitive for geological exploration. I’ll repeat: finding a deposit is a multi-year process requiring significant investment in drilling, geophysics, geochemistry, and subsequent resource assessment. The investor takes on high geological and financial risk, so predictable regulation and clear decision-making timelines matter enormously to them.
— Perhaps this kind of erratic and extreme behavior from industry officials stems from growing outrage that we’re “giving away the subsoil to be plundered” and not taking national security into account? That there’s no clearly structured policy…
— Kazakhstan needs to strike a balance between securing national interests and preserving the industry’s investment appeal. If an investor has met all legal requirements and is fulfilling their obligations in good faith, they should understand the rules of the game and feel confident in the stability of decisions already made. Otherwise, a perfectly logical question arises: “Why does the Government travel the world attracting investment if, in the end, an investor’s deal could be blocked or their issued license ‘lost’?”
— There’s another painful situation, both for investors and for the country as a whole, that I’d like to talk about. High demand for critical resources — take gold, whose price per ounce has climbed to five thousand dollars and keeps rising — attracts not only legitimate companies that go through the regulator by the book, but also unregulated prospectors.
In the internet age, people are well aware of rising prices and demand for what’s in our subsoil. The thinking of unregulated prospectors goes like this: “The subsoil belongs to the people under the constitution, so I can buy Chinese metal detectors and other equipment and start mining gold illegally.” As soon as information surfaces about gold placer deposits in quartz-vein formations at a particular site in the steppe, that spot instantly becomes a magnet for illegal prospectors. There are many of them in eastern Kazakhstan, in the Balkhash region… And it takes on a criminal character, because groups of illegal prospectors live in entire camps governed by their own rules, involving tens of thousands of people. As world prices for gold or tungsten continue to rise, the number of these camps will keep growing too. And most importantly, the activity of illegal operators in geological exploration means not just unpaid taxes, but also serious environmental damage.
Today the situation plays out like this: a legitimate investor comes to the authorized body (the National Geological Service), receives reports and preliminary forecasts about millions of tons of critical minerals. But after paying all the initial fees, bringing in equipment and specialists, and arriving at the project site, investors find a discouraging picture: the entire future site in the steppe has already been dug up and turned over. Appeals to local authorities, akimats, and police yield no results.
— In your view, how should the fight against unregulated prospectors be conducted, if neither local authorities nor police are able to help?
— This is a complex issue that can’t be solved by law enforcement alone. Social, economic, and institutional causes are all intertwined here.
— Could you clarify what you mean by social causes?
— There are several. One is the debt burden among Kazakhstanis, which has led to banks freezing accounts. Unemployment compounds this. And during field season, people looking for work to feed their families head to East Kazakhstan, Aktobe, and the Balkhash region, where they’re hired on as prospectors.
— But the fight against illegal mining shouldn’t fall entirely on investors’ shoulders. That’s not their role or their goal.
— Agreed. The state has already done a great deal of work building a modern licensing system and attracting investment into subsoil use. The next step should be strengthening protections for good-faith subsoil users and improving coordination between relevant government agencies, local executive bodies, and law enforcement structures. An investor needs confidence not only that they can obtain a license, but that their rights will be protected throughout the entire life of the project. In my view, personal accountability for achieving industry results is key. The functions of the National Geological Service or the Geology Committee shouldn’t be limited to just issuing licenses to investors. The state has allocated $500 million for geological exploration for the first time, but we’ve forgotten the days when our geological officials would report from the field in work coveralls. There needs to be a specific person who, throughout the entire field season, travels to sites, monitors the situation, reports back, and bears personal responsibility for ensuring investor safety. After all, legitimate companies exploring the subsoil pay substantial taxes and, accordingly, have every right to demand that safety be ensured on the ground. And what we see today is that in the steppe, those operating in the gray zone are winning. Our country has every condition needed to become one of the key centers of geological exploration in Eurasia. But again, to get there, it’s not enough to just attract investment — we need to create conditions where investors are willing to commit for the long haul and expand their presence.
Original article:
https://np.kz/news/ekonomika/promyshlennost/otrasl-bez-hozyaina-2