Kazakh President Kassym-Jomart Tokayev ordered his government on Tuesday to extract greater tax revenue from the mining sector which he said was profiting from higher metals prices.
Kazakhstan has just weathered the worst bout of unrest since it gained independence from the Soviet Union three decades ago and the plan for higher taxation of the mining sector was included in a package of measures announced by Tokayev on Tuesday to try and bridge income inequality.
The Central Asian country is the world’s top global producer of uranium, the metal that fuels nuclear power plants, and also has large deposits of copper, iron ore and zinc.
Prices of industrial metals prices surged last year and the price of uranium also jumped last week after the unrest, which was initially sparked by protests against a hike in fuel prices but widened into what the authorities have since called an attempted coup d’etat. read more
“The income of firms in the mining sector has grown against the backdrop of higher prices for raw materials,” Tokayev said in his speech to parliament.
“I am ordering the government to come up with a plan (to bring) additional revenues to the budget. In exchange we can provide large incentives for the exploration and development of new deposits for large mining and other companies.”
Among other measures, Tokayev urged big businesses to make regular contributions to a new charity foundation, froze the salaries of senior-level civil servants and said the government must eliminate monopolies and ensure fair competition.
He did not provide additional details on the initiative or on the incentives that might be given to mining firms. Nor did he say when the measure might come into force.
It was therefore not immediately clear how Tokayev’s plan might affect foreign mining and commodity companies such as Glencore (GLEN.L), Rio Tinto (RIO.L) and French nuclear fuel firm Orano that do business in the Central Asian country.
Glencore, which controls zinc, copper and lead producer Kazzinc, declined to comment on the president’s tax comments. A source familiar with the situation said Glencore’s operations had not been impacted by the protests.
National mining company Kazatomprom (KZAP.KZ), the world’s biggest producer of uranium said last week that its operations and exports were not affected by the unrest, which the authorities say has since been brought under control. read more
Russia announced a similar mining tax measure last year, imposing higher taxes on metals firms to attract more budget revenue.