KAZAKHSTAN Law and Practice Contributed by: Timur Odilov, Mikhail Abdulov, Olzhas Abubakirov and Dauren Sadykov, Haller Lomax LLP
Kazakhstan is balancing between institutional development and public micromanagement, between promotion of local manufacturing and improvement of investment climate, particularly in the mining sector. To achieve these objectives, Kazakhstan implemented the SSU Code, there - by opening up the state territory for exploration on a “first come, first served” basis. This proactive approach is part of Kazakhstan’s broader strategy to enhance transparency and simplify regulatory processes in the mining industry. The SSU Code introduced reforms aimed at streamlining administrative procedures, reducing bureaucratic hurdles, and promoting a more investor-friendly environment. By adopting this SSU Code, Kazakhstan aims to boost inves - tor confidence and create a competitive edge in the global mining landscape. Beyond regulatory changes, Kazakhstan has undertaken strategic efforts to improve its investment climate. The country has embraced common law principles under the AIFC, reinforc - ing legal frameworks and providing additional incentives for investors. One of the primary issues surrounding invest - ment in the mining sector in Kazakhstan revolves around frequent alterations to tax legislation, leading to inconsistent application and interpre - tation. Companies argue that the unexpected and frequent shifts in the tax regime have result - ed in delays in making investments. 5.2 Foreign Investment Restrictions and Approvals in the Exploration and Mining Sectors There are no general restrictions on foreign companies holding mining rights. Any individual and legal entity (whether national or foreign) can hold exploration or mining rights, provided they
comply with the requirements of the SSU Code (eg, availability of financial, professional, and technical capabilities). The procedure of obtain - ing licences is the same for national and foreign investors. However, the MIC retains the right to refuse an application for an exploration or mining licence due to national security issues. Mining rights to a uranium deposit may only be granted to the National Atomic Company Kaz - atomprom JSC (KAP) and can be subsequently transferred to an investor or joint venture, by which more than 50% of direct or indirect inter - est must remain for KAP. Moreover, recent practical trends indicate that licences for exploration of solid minerals in areas containing uranium mineralisation or uranium deposits are to be issued exclusively to KAP. Previously, the MIC issued exploration licences for such areas to third parties. However, there is court practice where such licences have been invalidated for further reservation by KAP. In addition, a mandatory condition for granting the subsoil use right for hydrocarbons at Cas - pian and Aral Sea is that the National Company KazMunayGas JSC (national hydrocarbon com - pany) must have a minimum 50% of share par - ticipation as a subsoil user under the contract in the field of hydrocarbons. 5.3 International Treaties Related to Exploration and Mining Kazakhstan is a party to actual BITs with approx - imately 50 countries, establishing guarantees for the protection of investment activities. Texts of these treaties can differ in terms of defining an investor, an object of investment, protected
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