Mining regulatory regime in Kazakhstan

In Kazakhstan, all subsoil reserves belong to the state. The Competent Body (currently the Ministry of Industry and New Technologies, previously - Ministry of Energy and Mineral Resources) grants exploration and production rights by means of conclusion of subsoil use contracts. Subsoil use rights are granted for a specified period, but they may be extended before the expiration of the contract and license (if applicable). Subsoil use contracts may be terminated by the Competent Body if the subsoil user does not satisfy its contractual obligations, including, but not limited to, periodic payment of royalties and taxes to the government and the satisfaction of mining, environmental, safety and health requirements. However, the breach of contractual obligations fully eliminated by the subsoil user within the terms stipulated by the Competent Body may not be a reason for termination of the Contract by the Competent body.

Under the current contractual regime, subsoil use contract terms are agreed by the parties during a negotiation process. The government of Kazakhstan has developed a contract for use as a sample for subsoil use contracts. The terms and conditions of a model contract not already regulated by legislation may be amended by agreement of the parties.

In general, Kazakhstan law generally recognises the concept of stabilisation and guarantees stability of the terms and conditions of subsoil use rights, even if subsequent legislation worsen the results of subsoil user's business activity. Likewise, if a contract contains provisions establishing that the contract's terms and conditions cannot be changed without the parties' consent, any changes introduced by subsequent legislation are not automatically applicable unless the parties expressly agree. However, in certain circumstances, the parties to a subsoil use contract have to amend the subsoil use contract to comply with effective laws. The application of stabilisation provisions is usually stipulated in the subsoil use contract. Stabilisation protection is not available for certain matters, including environmental protection, healthcare, defence, national security, taxation and customs control.