KAZAKHSTAN Law and Practice Contributed by: Timur Odilov, Mikhail Abdulov, Olzhas Abubakirov and Dauren Sadykov, Haller Lomax LLP
Losses incurred by an individual or legal entity as a result of the issuance of an act by a state authority or another government body that does not comply with the legislation, as well as the actions (or inaction) of the officials of these bod - ies, shall be compensated by the Republic of Kazakhstan or, respectively, by the administra - tive-territorial unit. Subsoil Use Contracts for Solid Minerals (Except for Uranium) Concluded Before 29 June 2018 Exploration contract A standard contract for exploration of solid minerals could be concluded for a period of six years. In the event of a deposit discovery, the subsoil user has the right to extend the exploration peri - od for the duration necessary for appraisal. The subsoil user who discovers a deposit of solid minerals, as outlined in the subsoil use contract, has the exclusive right to obtain a mining licence on a priority basis. Mining contract A standard contract for exploration mining of solid minerals could be concluded for a period of no more than 25 years, and for deposits with large and unique mineral reserves – no more than 45 years. A mining contract can be extended for no more than 25 years (unlimited times). In case of extension of a mining contract or com - bined exploration and mining contract (mining period) of solid minerals on a subsoil site con - taining a large deposit for a period exceeding ten years, the MIC may include in the terms of
such extension one of the following obligations of the subsoil user: • creation by a subsoil user or its subsidiary or a joint venture of processing facilities; • modernisation or reconstruction of the subsoil user’s existing production facilities; • modernisation or reconstruction of existing processing facilities; • supply of mined minerals to processing enter - prises (production facilities) located in the territory of the Republic of Kazakhstan; and • procurement by a subsoil user, its subsidi - ary or a joint venture of an investment project in accordance with the Business Code or a project aimed at the social and economic development of the region. If the subsoil user declines to extend the con - tract under the above terms, the corresponding deposit will be put up for auction upon the con - tract’s expiration. The contract area is exclusive both under the exploration, mining or combined exploration or mining contract. Grandfather clause Subsoil use contracts also include a provision known as the “grandfather clause”, commonly expressed as follows: “The subsoil user is guaranteed protection of their rights in accordance with the legislation of the Republic of Kazakhstan. Changes and additions to the legislation that adversely affect the results of a subsoil user’s business activi - ties under contracts do not apply to contracts concluded before these changes and additions were made.
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