ORDER OF THE GOVERNMENT OF THE REPUBLIC OF KAZAKHSTAN

of December 30, 2022 No. 1127

About approval of the Concept of development of geological industry of the Republic of Kazakhstan for 2023 - 2027

The government of the Republic of Kazakhstan DECIDES:

1. Approve the enclosed Concept of development of geological industry of the Republic of Kazakhstan for 2023 - 2027 (further - the Concept).

2. To the state bodies responsible for implementation of the Concept:

1) to take measures for implementation of the Concept;

2) to provide timely execution of the Action plan on implementation of the Concept.

3. To represent to the ministry of ecology, geology and natural resources of the Republic of Kazakhstan to authorized body on the state and strategic planning the report on implementation of the Concept according to the procedure and the terms determined by the order of the Government of the Republic of Kazakhstan of November 29, 2017 No. 790 "About approval of System of state planning in the Republic of Kazakhstan".

4. Declare invalid the order of the Government of the Republic of Kazakhstan of August 13, 2012 No. 1042 "About the Concept of development of geological industry of the Republic of Kazakhstan till 2030".

5. To impose control of execution of this resolution on the Ministry of ecology, geology and natural resources of the Republic of Kazakhstan.

6. This resolution becomes effective from the date of its signing.

Approved by the Order of the Government of the Republic of Kazakhstan of December 30, 2022 No. 1127

The concept of development of geological industry of the Republic of Kazakhstan for 2023 - 2027

Section 1. Passport

Section 2. Analysis of the current situation

Chapter 1. Assessment of the current situation of condition of geological industry

The earth and its subsoil, waters, plant and animal life, other natural resources belong to the people. On behalf of the people the property right performs the state.

Minerals in subsoil of the Republic of Kazakhstan have key value for development of economy of the state. The subsoil rich with minerals are natural natural benefit of the state and shall serve for ensuring welfare of the people.

Current world trends in the mineral and raw sector are characterized by universal depletion of profitable inventories of minerals because of large volumes of production, more difficult mining-and-geological conditions for work on investigation and development of fields, their corresponding rise in price. The general condition of the world mineral and raw market is characterized by the following factors now:

1) along with non-ferrous and precious metals the tendency to increase in demand for rare and rare-earth metals, lity and other critical metals important for transition to carbon neutrality is noted;

2) there are consolidation of the countries on economic interests within raw partnership, diversification of world supply of mineral raw materials, and also violation of traditional logistics chains of delivery of raw materials to the world markets;

3) toughening of the competition between the countries for investments into exploration and production of mineral resources and possession is noted by them.

The undertaken legal reform of the sphere of subsurface use which was marked by adoption on December 27, 2017 of the Code of the Republic of Kazakhstan "About subsoil and subsurface use" (further - the Code about subsoil), cardinally changed normative and legal architecture in the field of subsurface use, having provided more competitive access to subsoil, data on subsoil and subsurface use, geological information, having strengthened protection of exclusive rights of opener of the field on its development. This reform in many respects was based on recommendations of the World Bank with reference point on model jurisdictions. For example, Western Australia in mining part of reform.

The general procedure for issue of licenses for subsurface use implemented in mining industry by the principle "The first came - the first received" (the principle of the first request) provides much the reduced terms of provision of the right of subsurface use, considering at the same time risks on recovery of the environment and financing of works, - the license for investigation is provided under condition of provision of financial provision of mitigation of consequences of investigation.

The mechanism of step-by-step regulation and control of investigation of solid minerals is replaced with the mechanism of so-called "smart regulation" inducing the subsoil user to more intensive work: the increasing requirements for the minimum expenses on geological exploration and lease payments depending on the number of blocks and duration (year) of action of the license, obligation of return at least 40% of blocks upon termination of the initial six-year period of investigation in case of initial quantity more than 10 blocks, and also expense burden on ensuring mitigation of consequences of subsurface use for each withheld block. At the same time the list, amount, methods and methods of works are subject to independent determination by the subsoil user.

In the oil and gas sphere the general procedure for provision of the rights of subsurface use to exploration and production or hydrocarbon production is replaced with tender with the electronic auction initiated by investors.

Regulation of geological exploration in the oil and gas sphere also underwent liberalization, having excluded universal control of scoping, methods and methods of work with replacement by the minimum list of works on investigation which amount and methods are also subject to independent determination by the subsoil user.

For the purpose of streamlining of provision of the rights of subsurface use on solid minerals and hydrocarbons the Management program is adopted by the state fund of subsoil (further - PUGFN) in which the territories for provision of the rights of subsurface use on exploration and production of minerals are designated, is provided open entry to geological information, many administrative barriers are excluded.

On September 1, 2021 within the President's letter of the Republic of Kazakhstan to the people of Kazakhstan of September 1, 2021 "The unity of the people and system reforms - strong basis of prosperity of the country" to the Government is entrusted to complete implementation of the principle of the first request on issue of licenses for investigation of solid minerals on all territory of the Republic of Kazakhstan by July, 2022. As of August 12, 2022 in PUGFN for provision of the right of subsurface use by the principle of "The first request" for investigation of TPI well more than 300 thousand blocks (the area - 742,5 of one thousand sq.km).

These legislative changes expected active geological exploration due to private investments naturally assume need for modern institutional transformation and reconsideration of functional role of the state for the geological industry more consisting in information and scientific support of investors from geological department for the purpose of decrease in investment risks, improvement of knowledge and scientific data on the natural and technogenic processes happening in earth subsoil. The similar institutional model of functioning of geological service successfully functions in the countries with the developed resource industry.

In this regard, for the purpose of rendering complex service support to investors by means of open access to geological information, generalization, systematization and the analysis of geological information together with scientific institutions of the Republic of Kazakhstan in the field of geology, according to the Message of the Head of state to the people of Kazakhstan of September 1, 2021 "Unity of the people and system reforms - the strong basis of prosperity of the country", is created National geological service (further - NGS).

According to the order of the Government of the Republic of Kazakhstan of December 30, 2021 No. 971 and the charter main objective of activities of NGS - development of information and scientific basis of subsurface use in the Republic of Kazakhstan. The main objects of activity of NGS are:

- collection, storage, generalization, systematization and the analysis of geological information together with scientific institutions of the Republic of Kazakhstan in the field of geology;

- support to investors by means of:

- provisions of open access to geological information;

- operation of National Bank of these mineral resources of the Republic of Kazakhstan (nowadays the Kaznedra platform on the website minerals.gov.kz).

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