Economic Development in Kazakhstan: The Role of Large Enterprises and Foreign Investment

By Anne E. Peck | Go to book overview
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7

PRIVATIZATION, FOREIGN INVESTMENT, AND CONSOLIDATION IN THE PRINCIPAL ENTERPRISES OF THE FERROUS METALS SECTOR

At the time of independence, approximately 95 percent of the chromite, 10 percent of the iron ore, and 2 percent of manganese produced in the former Soviet Union came from mines in Kazakhstan (Sagers 1996). Kazakhstan’s two ferroalloy plants accounted for just less than one quarter of the total Soviet production capacity. Steel production from the Karaganda Metallurgical Combinat (Karmet) accounted for a little less than 5 percent of Soviet production in 1990, a figure which significantly understates the importance of Karmet in Kazakhstan where it accounted for more than 10 percent of the country’s GDP in Soviet times (Almaty Herald March 26/April 1, 1998). In total, ten enterprises comprised virtually the entire sector - three iron ore mining complexes, one chromite mining complex, three manganese mining complexes (one also producing iron ore and another lead and zinc), one integrated iron and steel enterprise, and two ferroalloy plants. Of these, three enterprises were dominant. Karmet was the largest single enterprise in Kazakhstan and employed 30,000 metallurgical workers (Feller Mining News September 19, 1999). The Sokolov-Sarbai (also Sokolovska-Sarbai) iron ore mining complex produced 60-70 percent of the iron ore mined in Kazakhstan and employed another 28,000 workers (Feller Mining News May 9, 1997). The Aksu Ferroalloys Plant was the largest ferroalloy plant in the world. Today, the sector is for all intents and purposes composed of just three large enterprises - the Sokolov-Sarbai Mining and Concentration Plant, Ispat Karmet, and Kazchrome - with just two owners - the Eurasian Bank Group, which also owns Aluminum of Kazakhstan, and Ispat International of the UK-based LMN Group.

Production of ferrous metal ores, especially iron ore, plummeted after independence, as shown in Figure 7.1. From 1992 to 1994, aggregate

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