24 ноября 2023
Paolo Sorbello, photo mcc.kz

The Week in Kazakhstan: Next in Line

ArcelorMittal to sell off Kazakhstan’s subsidiary next week, opposition politician sentenced for corruption.

The Week in Kazakhstan: Next in Line

On November 23, at a Collective Security Treaty Organization (CSTO) meeting of heads of state in Minsk, President Kassym-Jomart Tokayev said the military alliance should focus on the fight against terrorism and extremism. From January 1, Kazakhstan will take over the rotating chairmanship of the CSTO for one year. Armenia, a CSTO member, did not participate in the meeting.

At the CSTO meeting, Tokayev also said that the international community should enshrine the right of Palestinians to a state, under the umbrella of the United Nations, abiding by the principle of “two peoples, two states”. The Israel-Hamas conflict taking place in the Gaza Strip for the past two months has already claimed around 15,000 lives.

The government plans to announce the buyer of ArcelorMittal Temirtau’s assets by the end of November, prime minister Alikhan Smailov told the press on November 23. Several cabinet members have for months said that the steel giant should leave Kazakhstan, after a wave of industrial accidents resulted in dozens of workers killed.

In an interview with Vlast, a trade union representative at PVASS, a major emergency rescue service company, said the employees had grappled with low wages, irregular payments, and outdated equipment. The company was privatized in 2018 and workers have since lamented worsening conditions. The trade union leader also added that the government failed to answer worker requests to intervene. The company was involved in the rescue operation after the accident at ArcelorMittal Temirtau’s Kostenko mine at the end of October, which claimed the lives of 46 workers, the deadliest industrial accident in Kazakhstan’s history.

Kazmunaigas, the state-owned oil and gas company, said on November 22 that it completed the acquisition of a 60% stake in the Dunga oil field in the western Mangistau region. The stake was previously owned by France’s TotalEnergies via a German subsidiary. Kazmunaigas did not disclose the price it paid for the stake. In November 2022, Oriental Sunrise had offered $330 million for the stake, but Kazakhstan’s government blocked the deal. Businessmen Bauyrzhan Bisembayev and Zhan Makatov had established Oriental Sunrise just 11 days before the negotiation started. Oman Oil Company and Partex each own 20% in the field.

On November 22, Kazmunaigas published interim financial results for the first three quarters of 2023, showing a sharp decline in revenues (-10%) and net profits (-18%) compared to the previous year. The company blamed the downward trend on oil prices, which have decreased on average by 22% in the same period. In its upstream segment, Kazmunaigas saw oil (+9%) and gas (+18%) production increase.

The international oil and gas companies involved in the offshore Kashagan project are said to have proposed a $200 million cash settlement against a $5 billion fine allegedly imposed by Kazakhstan’s government over environmental violations, Bloomberg wrote on November 17, citing people familiar with the matter. Neither the fine nor the negotiation around its settlement are public.

Former vice-minister of labor and opposition politician Nurzhan Altayev was sentenced to 10 years in prison on November 21, after a court in Astana found him guilty of taking a bribe while in office. He was arrested in June. Since September 2020, Altayev has tried to register a new party.

Kazakhstan’s Central Bank lowered on November 24 the base interest rate by 25 basis points to 15.75%. This is the third consecutive time that the regulator cuts rates, on the back of weaker inflation pressure. The Central Bank also revised down from 10-12% to 9-10% its inflation forecast for 2023.

The shareholders of Polymetal, a Russian gold mining company, will vote in early December to exchange their company’s stakes that are currently frozen due to sanctions from the European Union with securities listed in the Astana International Financial Center. The London-listed company said on November 23 that the frozen shares amount to around 22% of the total. In August, Polymetal transferred its headquarters to Kazakhstan.