http://www.kazakhstaninvestment.com

Politics and Macroeconomics

Kazakhstan Further Improves Investment Climate

"Kazakhstan will continue measures aimed at improving the investment climate," President Nursultan Nazarbaev said at the 12th Plenary Session of the Foreign Investors Council (FIC) on Friday in Astana.

"The government will ensure stability and transparency in concluding contracts, and issuing licenses and approvals," he emphasized. The president said that the republic is paying a lot of attention towards improving the laws that protect investor rights.

In the tax policy, for example, the republic is working to reduce the tax burden and to develop special tax regimes. "We are open to new ideas that can accelerate the development of our country in promising directions," Nazarbaev specified. "The government is already pursuing an expedient policy aimed at enhancing the quality of state services in all areas within the administrative reform program and to form an electronic government," he continued.

He also emphasized that Kazakhstan plans to vigorously move forward on currency regulation and the introduction of EU standards in the financial sector in 2007. "The development of the stock market and introducing new investment projects to the stock market will solve the problem of newly created production.

The next session of the FIC will be held in June 2005 in Karaganda. (Interfax-Kazakhstan)

Gold And Silver Output Decreases

From January to November 2004, Kazakhstan produced 8,650 kg of refined gold, which is down 4% from last year. Meanwhile, the output of refined silver for the same period decreased by 13%, totalling 646,629 kg, the National Statistics Agency stated.

At the same time, from January to November 2004, Kazakhstan produced 1,341,762 tonnes of aluminium silicate, and 286,332 tonnes of untreated zinc, which is an increase of 103% and 106% respectively from last year.

Output of refined copper in blanks, excluding sintered products, rolled products, and those that have undergone extrusion or forging, reached 409,471 tonnes for the first 11 months of 2004, an 104% increase from last year.

Moreover, Kazakhstan showed an increase in magnesium production and goods thereof. However, the agency has not given any actual figures for the report.

The output of untreated cadmium for the reporting period was 1,849 tonnes, which is up by 2.31 times from the same period of last year, and includes cadmium-zinc waste and scrap and cadmium powders, and excludes cadmium carbide. (Interfax-Kazakhstan)

Equities

The KASE-Shares index increased by 2.35% to 213.45 by the end of period on December 14, 2004.   

KASE-Shares index and weekly volume of trades.

Note: KASE-Shares index is based on ask prices for equities in A Listing

In the period between December 8 and December 14 2004, the volume of equity trades at the KASE increased to USD 20,045,529 from USD 14,663,954 in the previous period. The shares traded during the period were common shares of Almaty Kus (ALKS), AktobeMunayGas (AMGZ), Alyans Bank (ASBN), Astana Finance (ASFI), CenterCredit (CCBN), Charaltyn (HRLT), Kazakhmys (KZMS), Kazakhtelecom (KZTK), Neftebank (NFBN), Nurbank  (NRBN), ROSA (ROSA), Temirbank (TEBN), KazUvelirProm (VTZL) and Zerde (ZERD) and preferred shares of Alyuminiy Kazakhstana (ALKZp), ATF Bank (ATFBp), Kazkommertsbank (KKGBp), KazChrome (KZCRp), Kazakhtelecom (KZTKp), MangystauMunayGas (MMGZp) and Nurbank (NRBNp6). (Irbis)

Company News

Oil & Gas

The JSC Center for Marketing and Analysis under the Kazakhstan ministry of economy and budget planning of Kazakhstan ran a competition among globally acknowledged leaders in petrochemical consulting services to conduct research for determining the economics of the creation of national petrochemical production. Nexant Ltd was announced as the winner. Nexant Ltd will determine prospects for the development of a petrochemical industry in Kazakhstan and present its recommendations for attracting foreign investments. The assignment will be completed with a plan for the development of a petrochemical industry that will allow Kazakhstan to occupy a worthy global position among petrochemical producers.

Nexant Ltd is the largest consulting company that specializes in the chemical and petrochemical industry, and has been working in the world market for 40 years. Nexant's consulting services cover the entire line of petrochemical production, from oil and gas to the finished petrochemical products. (KazInform)

***

The Amangeldy gas deposit in the Jambyl Oblast currently produces almost 700 thousand cubic meters of gas per day. According to Amangeldy Gas CJSC, production will increase by 300 thousand cubic meters, and 17 holes have been drilled in order to achieve this goal.

"Well 104 is not usual," the Director of Amangeldy Gas, Marat Narembayev said in an interview. "It is a dual well." A vertical bore well has already been drilled and tested, and now slope sinking is being done. The slope is 38 degrees away from the old hole. Due to the angle, the yield of the gas-bearing bore must increase by an estimated 30-40%.

One additional exploration well, drilled in the 1970s and then shut down, is also operating. This well, with a theoretical yield of 70 thousand cubic meters of gas per day, has been reopened. (KazInform)

***

"We hope that after 15 gas filling stations in Almaty are built, we will be able to repeat this project nation-wide," the General Director of KazTransGas, Abai Sadykov said yesterday at the opening of the first gas filling station.

The project's complex design and construction will allow Kazakhstan to benefit from environmentally safe fuel, natural gas. This is a long-term project that will continue for 20-25 years. As of July 1, 2004, KazTransGas invested over KZT 179 Million into the first gas filling station.

According to Mr. Sadykov, if natural gas were used in cars, auto emissions would decrease, car owners would reduce their expenses for fuel by over two times because gas is cheaper than gasoline on an average of over two times, and the life of an engine will increase by 1.5 times. More people will re-equip their cars to use the new fuel. The growing number of environmentally safe filling stations, currently about 10 in Kazakhstan, is beneficial for consumers. (KazInform)

***

The Atyrau Oblast Akimat and Razvedka Dobycha KazMunayGas have concluded a memorandum on social partnership, which was signed by the General Director of the company, Zhakyp Marabayev, and the Akim of the Atyrau Oblast, Aslan Musin.

According to the document, the oblast will receive about KZT 500 Million from the oil business in 2005 to develop the social infrastructure and poor families of the Zhylyoi, Isatay, Makat and Kyzylkogin districts. KZT 210 Million will be used to complete the construction of schools for 120 students in the village of Asan and 220 students in the village of Ushtogan in the Kurmangazy district.

In the Zhylyoi district, the money will be used to repair apartments owned by disabled veterans and workers, and to organize children's vacations. Similar assistance to the disabled and the poor is planned for the Isatay and Kyzylkogin districts. The company also promised to help purchase facilities for sport schools in the district center and equipment for a baby food manufacturing facility. (KazInform)

***

OzenMunayGas, a subsidiary of Razvedka Dobycha KazMunayGas, will conduct three-dimensional seismic research at 300 square kilometers of the Uzen deposit in 2005 in order to delineate the field. The research will determine the prerequisites for oil and gas reserve growth for OMG.

According to the national company, 3D seismic exploration had been conducted at the Uzen and Karamandybas fields, which determined production levels of the geological structures. It was recommended to drill three prospect wells to find new oil reserves at Uzen and Karamandybas.

As a result, an additional program for seismic research to determine the production level in the eastern part of the field and geologising had been planned. The initial geological reserves of the Uzen deposit total a billion tonnes of oil. The remaining recoverable reserves total over 400-450 million tonnes of oil. OMG plans to extract 5.9 million tonnes of oil in 2004. (Kazakhstan Today)

Banking and Finance

The European Bank for Reconstruction and Development (EBRD) has given two loans totalling USD 16 Million to the Kazakhstan-based commercial ATFBank and Bank CenterCredit (BCC).

While visiting Almaty last Wednesday, the EBRD President, Jean Lemierre signed the corresponding loan agreements with the management of the two banks.

In addition, a news release from the EBRD country office in Kazakhstan read on Thursday that the EBRD has lent USD 10 Million to ATFBank to finance micro and small businesses in Kazakhstan.

According to the news release, under this program the EBRD, together with partner banks provides loans from USD 20,000 to USD 200,000 via 200 micro-lending outlets in 40 towns in Kazakhstan.

The Bank also announced a second deal with Bank CenterCredit to increase financing available to private farms and agribusiness companies in Kazakhstan for buying key agricultural equipment via a USD 6 Million facility. (Interfax-Kazakhstan)

***

The bidding continued for the state block of shares (SBS) of the Alliance Bank JSC on Monday at the Kazakhstan Stock Exchange (KASE). During the session, the seller, who is authorized as the RSE Information-stocking center by the committee of state property and privatisation of the ministry of finance of Kazakhstan, reduced the offering price from KZT 12,500 to KZT 11,100. The demand remains the same, KZT 9,500. As a result, the deal was not concluded, and bidders have not reached a compromise. Bids will continue at the KASE until December 31 of this year under the current conditions. (KASE)

Metals and Mining

The Net profit of the Aluminum Kazakhstan JSC (Pavlodar oblast) totalled KZT 5.308 Billion in January-September 2004 versus KZT 2.532 Billion in the same period of 2003, the company's financials submitted to Kazakhstan Stock Exchange (KASE) demonstrate.

According to the statements, Aluminum Kazakhstan's assets as of the end of the reporting period amounted to KZT 39.134 Billion, compared to KZT 33.023 Billion as of October 1, 2003; its liabilities stood at KZT 6.766 Billion and KZT 7.269 Billion respectively; equity capital was KZT 32.368 Billion and KZT 25.753 Billion; whereas charter capital remained unchanged at KZT 5.835 Billion.

The company's nine-month sales totalled KZT 28.054 Billion versus KZT 22.984 Billion during the same period of last year, with their cost being KZT 18.560 Billion and KZT 16.146 Billion, respectively.

As reported earlier, Aluminum Kazakhstan produced 1,091,000 tonnes of aluminium during the first three quarters of 2004 (103% compared to the 2003 figure).

Aluminum Kazakhstan is among ten leading producers of aluminium in the world. 31.76% of Aluminum Kazakhstan shares that were previously owned by the state now belong to Corica AG of Switzerland beginning April 2003. The enterprise combines the Pavlodar aluminium plant (head enterprise), the Turgay and Krasnooktyabrsk bauxite mines; the Keregetas lime pit, and heat station No 1.

Aluminum Kazakhstan is a member of the Eurasian Industrial Association (EIA) that also unites the Sokolovsk-Sarbaisk ore mining and processing enterprise (Kostanay oblast), the Eurasian Power Corporation JSC (Pavlodar oblast), the Shubarkol Komir coal mine (Karaganda oblast) and the Kazchrome transnational corporation. (Interfax-Kazakhstan)

Transport and Telecommunications

The tanker, Astana, built in Russia on Kazakhstan's order, will embark on its maiden voyage next week in Vyborg, the Kazakhstani Ambassador to Russia, Krymbek Kusherbaev said.

"The oil tanker known as Astana planned for the Caspian Sea will embark next week," Kusherbaev said at the opening ceremony for the Week of Kazakhstan in Moscow on Tuesday.

Speaking in general on Russian-Kazakhstani relations, he stressed that in the past two years; mutual trade turnover between the two countries has increased by 2.5 times and totals USD 8 Billion.

The ambassador also spoke in favour of stimulating bilateral cultural cooperation.

The Russian president's special envoy for humanitarian cooperation with CIS states, Jakhan Pollyeva said that recently, the Kazakhstani President Nursultan Nazarbaev signed a decision to allocate additional quotas for the education of students from Kazakhstan in Russia.

The embassy's press secretary explained to Interfax that it included allocating "3,000 scholarships for education abroad, of which one half would be given to students wishing to study in Russia". (Interfax)

***

A news conference on the conclusion of an agreement between the Kazakhtelecom JSC and the Microsoft Corporation regarding the switching over to a new program for corporate licensing took place on Monday in Almaty.

Vice-President and Senior Administrative Director of Kazakhtelecom, Taugazy Abdikulov and the Vice-President of Business Development, Askar Bishigaev discussed the new program on behalf of Kazakhtelecom and the Director General of the Microsoft Corporation in Kazakhstan and Central Asia, Aidar Dauletov and the Microsoft President in Russia and CIS Countries, Olga Dergunova spoke on behalf of the Microsoft Corporation.

Founded in 1975, the Microsoft Corporation is a recognized

world leader in software production for personal computers. The company offers a wide range of software products and services for business and personal applications. All products have been created in order to allow users to employ PCs easily, simply and efficiently for every day use. (KazInform)

***

On Saturday, the Vyborg Ship-Building Plant JSC (VSBP) located in the Leningrad Oblast in Russia, delivered the tanker, Astana with deadweight of 12,000 tonnes, and is the first of three vessels of this series to be built for the Kazakhstani national maritime navigation company, KazMorTransFlot.

The length of the vessel is 149 meters, its width is 17.3 meters, and its velocity is 10.5 knots. The laying of the third tanker of the same series for KazMorTransFlot took place there as well.

VSBP General Director, Sergey Zavialov said that the second vessel of this series is currently being prepared for departure. VCPB plans to deliver the second and the third tankers to its customer in 2005. At the same time, VSBP is building three tankers for Kazakhstani Mobilex. The end of 2006 will also deliver these vessels.

The total cost of the projects, implemented by VSBP upon the request of KazMorTransFlot and Mobilex amounts to USD 80-90 Million. Construction of the tankers for the Kazakhstani companies makes up about 30% of VSBP's capacity.

AKO BARSS from Saint Petersburg is the major shareholder in the Vyborg Ship-Building Plant JSC, which acquired 75.6% of shares from Norwegian enterprise Kvaerner ASA in 2000. (Interfax-Kazakhstan)

Money Markets

KZT/USD market rate dynamics during the week

Currency Rates as of 21 December 2004

Note: Some of the information quoted in this issue has been provided for us by Golden Eagle Partners. For more information on those articles, please contact: zhonar@maverick.kz or newswire@ges.kz

For more information and other publications please contact Yelena Kovalenko at +7 (3272) 596 708

This publication is intended for investors who are not private or expert investors and should not, therefore, be redistributed to private or expert investors. Neither the information nor the opinions expressed herein constitutes, or is to be construed as, an offer or solicitation of an offer to buy or sell investments. Information contained herein is based on sources which we believe to be reliable but we do not represent that it is accurate or complete. Kazkommerts Securities Ltd. and/or connected persons may have acted upon or used this material, or the research or analysis on which it is based before its publication. Kazkommerts Securities Ltd. and/or connected persons may from time to time, as principal or agent, make purchases, sales and/or offers to purchase and/or sell in the open market or otherwise and may have a position long or short holding in any investment mentioned herein, or a related investment, as a result of engaging in such transactions.