– The region has large mineral reserves, especially oil and gas.
According to conservative estimates in the mid-2010s, the total volume of oil reserves in Central Asian countries reached 15-31 billion barrels (about 7% of total world resources), the total volume of natural gas reserves – 230-360 trillion cubic meters (7% of total world reserves*). The region can be included in the top 10 largest world gold producers (if we consider it as an integral entity with common trade rules).
The states of the Central Asian region have developed mining, metallurgical and chemical industries, fuel and energy complexes, which are concentrated mainly in Kazakhstan, Uzbekistan and Turkmenistan.
The approach to mineral extraction is different in these countries. Turkmenistan’s economy is almost entirely dependent on gas sales, Uzbekistan covers its fuel needs through domestic production, but is not a typical victim of the “Dutch disease”, i.e. does not base its economy solely on the sale of minerals, Kazakhstan seems to have formed a hybrid model of economy, free from full statehood, but, due to internal specifics, is still extremely dependent on oil and gas sales.
The importance of the region in terms of resource supply is disproportionately greater than the modest role it plays in the global economy.
*It is worth noting that the estimate of the world’s mineral reserves is not a fixed value either.
– The Central Asian region has already established routes for safe transportation of minerals (some of them as far back as the Soviet era). The region’s potential as a transit zone for any goods is unique and comparable only to the potential of developed regions such as, for example, the European Union.
– When the borders were opened for free export of minerals (mid-1990s), the post-Soviet countries of the region still had a strong enough base of specialists for the extraction and transportation of minerals. Any foreign company could start developing local deposits with the support of a pool of low-paid but qualified local performers.
– To a certain point, the most mineral-rich countries in the region were extremely stable politically and represented predictable and reliable partners.
Factors complicating the initially favorable picture include the fact that:
– Central Asia is surrounded on three sides by three large states (China, Russia and Iran), positioning themselves as peculiar competitors of the developed countries of the European Union and the United States.
– Russia and China themselves are (for various reasons) major buyers of minerals and seek to establish their own playing conditions in the region’s markets.
On the other hand, the weakness of the newborn political systems, the absence (at the time of independence) of its own developed financial elite, the strong influence of authoritarian neighbors, and corrupt governments that were not interested in upholding the interests of their own citizens, created conditions for numerous acts of corruption and violations of the law.
On this day – March 19, 2020 – a noticeably aged Mukhtar Jakishev, the former head of the Kazatomprom national company, who spent more than 10 years in prison, was released on parole.
He is greeted with writings on the placards and T-shirts, “Freedom to Jakishev”. When the gates finally open, two black jeeps drive out. People run when they see Mukhtar Jakishev in one of them.
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Mukhtar JakishevFormer head of Kazatomprom, recollections in one of his interviews“When I was released and people greeted me at the gate of the prison camp I was imposed a condition that I should ride past without stopping. Then I said: “no, then I’m not going out or I’m going to walk”. These were not my jeeps, they were jeeps of the National Security Committee”.
Then – postgraduate studies
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Mukhtar JakishevFormer head of Kazatomprom, recollections in one of his interviews“In the 1990s, I was in Moscow, working at 38 Petrovka Street [the famous building of the Main Department of Internal Affairs of the Moscow City Executive Committee], I had a laboratory there, I was a graduate student at the Moscow Engineering Institute. I was engaged in laser fingerprinting. We had a contract with the USSR Ministry of Internal Affairs to provide scientific assistance to the internal affairs bodies,” Mukhtar Jakishev tells his friend Armanzhan Baitassov.
In general, everything was going to Mukhtar Jakishev to take some high post in the government: experience and connections with people who were in very good standing at that time contributed to this.
But he went to the Kazatomprom nuclear company – not the most bread-and-butter place at that time, with a huge potential for development.
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Mukhtar JakishevFormer head of Kazatomprom“At that time uranium was an outsider in reality. I came to Kazatomprom – the price of uranium was low, $11 per pound, and it was falling. And there was no end to this fall, because 60% of the market was supplied from warehouses. The Canadians, the French were sitting on this market. The Soviet Union was collapsing, we popped up with our uranium, the market was feverish, the U.S. imposed anti-dumping – 112% duties. The Europeans also protected their market. Uranium was in surplus, pressure was mounting, missile disarmament was underway, and uranium mines were closing all over the world. The only ones left were those who can handle this small price. Stockpiles were plentiful until 2014. I came in 1998 – the price was 11-12, 2001 – 6.70. This was already the lowest of the low,” Jakishev said in an interview with Orda news.
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Mukhtar JakishevFormer head of Kazatomprom“Kazatomprom rewrote all existing contracts from the long-term price to the spot price, i.e. the price at immediate delivery, which the buyers gladly agreed to: the spot price is usually lower than the long-term price….// We got an average of $600 million out of it. It’s been called a blind spurt, but that’s nonsense. It was speculation on a pricing imperfection that we warned about in 2004, but because we were not listened to, we made money on it in 2005.”
No one in the public eye was following Jakishev: he wasn’t involved in politics, he wasn’t epathetic – he was, you might say, just doing business. And it did not work out in the government – he held the post of deputy energy minister for only three months, and then, as he says, “everyone was fed up with me, because I was breaking the rules of the game”.
“Fed up with” – let’s say. But you can’t put him in prison for that, can you?
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Mukhtar JakishevFormer head of Kazatomprom, recollections in one of his interviews“I said: either we both consider the possibility of transferring, or we both transfer. In the end, we signed an agreement in which we create five 50/50 joint ventures for a thousand tons of production with Rosatom, and they transfer to us a 50% stake in the enrichment plant with a capacity of 5 million rubles”.
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Mukhtar JakishevFormer head of Kazatomprom, recollections in one of his interviews“I was surprised when the Russian side said: is it okay if we take four deposits and give one to a private person? I said: it is your stake, do what you want with it. They take four for themselves and give one to Anisimov. And then they buy it from him. I said: I don’t care, it’s Russian cuisine, if they like doing such things, let them do it. Then Anisimov first appeared in Kazakhstan’s uranium industry. They apparently liked it: they took it for free, resold it, and shared the money somewhere”.
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Nurlan ZhumagulovDirector of the Union of Oil Service Companies of Kazakhstan“The shareholders of the combine were: GANBERG UK LTD – 60%, GEXIOR UK LTD – 40%. The contract for exploration was concluded in 2015, the combine has 49%, all the financial risks in the exploration works of JV Budenovskoye LLP on the sites #6 and #7 was assumed by the combine. In 2021, the company signed a production contract. In 2022 foreign partners (GANBERG and GEXIOR) decided to sell their share. The main question was only – who was behind GANBERG and GEXIOR? And how did they manage to acquire the most valuable asset for a pittance? The media reported that Alexander Klebanov was behind the GANBERG stake. And who was the beneficiary of GEXIOR? The same people (Maria Mylonova and Aristos Iacovou) represented the interests of these two companies at the shareholders’ meetings. One thing was clear – the Rosatom deal (for $1.3 billion) was authorized with Zhana Kazakhstan [the government – NB]. But it was possible to cancel the initial deal and gain an additional $1.3 billion for KAP. We assume who the true beneficiaries are, but since we do not have the facts, we will refrain from doing so.
In 2009, when the Kazakhstani government wanted the Russian entities, whose representative was a relative of Vladimir Shkolnik [Kazakhstani statesman – NB], to buy a stake in Uranium One, Jakishev proposed a contract with the Japanese company Toshiba. But the Kazakhstani government did not approve the deal with Japan. On May 21, 2009, Mukhtar Jakishev was arrested, and on May 22, 2009, Vladimir Shkolnik was recommended by the Prime Minister of Kazakhstan for the vacated position of the head of NAC Kazatomprom JSC.
Already in June 2009 (immediately after Jakishev’s arrest), Atomredmetzoloto (ARMZ), a subsidiary of Rosatom, acquired a 16.6% stake in Uranium One in exchange for a 50% stake in the Karatau uranium mining project jointly with Kazatomprom. In 2010, Uranium One received a 50% and 49% stake in Kazakhstan’s Akbastau and Zarechnoye uranium mining projects. In exchange, Russia’s ARMZ increased its stake in Uranium One to 51%.
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Mukhtar JakishevFormer head of Kazatomprom, recollections in one of his interviews“I was arrested just on the day we were supposed to meet with [Russian President Vladimir] Putin. They were flying in from Japan, it didn’t work out there. I talked to Yoshio Mochizuki-san, the vice minister – he started apologizing very much that it was his fault because he had a very tough conversation with Putin and “he must have gotten angry and you were immediately put in prison”. I told him that it wasn’t his fault, that I had a lot more faults besides Putin”.
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Mukhtar JakishevFormer head of Kazatomprom, recollections in one of his interviews“Recently I found in my group an open letter that I wrote on February 21, 2012. Here I cite the substantive charge: according to this charge, I am guilty of taking a bribe from an unidentified person in an unidentified place at an unidentified time and in an unidentified amount. Next, I will try to read you a citation from the judge: “All this shows that Jakishev is a sophisticated, insidious criminal who leaves no trace of his criminal activity and therefore deserves the most severe punishment”. This is the direct speech of the judge”.
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