VZCZCXRO4535
RR RUEHLN RUEHVK RUEHYG
DE RUEHTA #1073/01 1611341
ZNR UUUUU ZZH
R 091341Z JUN 08
FM AMEMBASSY ASTANA
TO RUEHC/SECSTATE WASHDC 2563
INFO RUCPCIM/CIMS NTDB WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUCNCIS/CIS COLLECTIVE 0522
RUEHAK/AMEMBASSY ANKARA 2171
RUEHBUL/AMEMBASSY KABUL 0402
RUEHNE/AMEMBASSY NEW DELHI 0507

UNCLAS SECTION 01 OF 02 ASTANA 001073 
 
DEPT FOR SCA/CEN (O'MARA) 
DEPT PASS TO OPIC - BALLINGER 
DEPT PASS TO TDA FOR STEIN, EXIM FOR GLAZER 
DEPT PASS TO AID - EE-PHILLIPS/RUSHING 
TREASURY FOR OASIA/VELTRI 
USDOC FOR 4231/ITA/MAC/MLONDON, 4201/BISNIS 
USDOC FOR 6110/ITA/TD/BI/RHALPERN 
ANKARA FOR CFC 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON EIND ENRG EPET EFIN KTDB KZ
SUBJECT:  KAZAKHSTAN ECONOMIC AND ENERGY UPDATE, May 4-17, 2008 
 
¶1.  Summary:  This information is drawn primarily from the 
Kazakhstani local press, and has not been verified for accuracy. 
 
-- Atameken Opposes Export Duties on Metals 
-- New Shareholders in Lariba Bank 
-- New Prospects for Economic Cooperation with Tajikistan 
-- Jordanian Investment on the Caspian Sea Coast 
-- Delegations from Lithuania and Japan Discuss Energy 
-- Eurasian Natural Resources Purchases Foreign Stakes 
-- Economic and Energy Statistics 
 
Atameken Opposes Export Duties on Metals 
---------------------------------------- 
 
¶2.  Kazakhstan's Atamaken chamber of commerce issued a statement in 
opposition to the government's plans to impose export duties on 
metals.  Atamaken argues that export duties will in effect be a 
barrier to the promotion of Kazakhstani goods in foreign markets, as 
well as impact efforts both to form a regional customs union and to 
enter the WTO.  The statement notes that such duties could seriously 
impede the development of so-called breakthrough projects in the 
metallurgical sector, which are largely export-oriented. 
(Interfax-Kazakhstan, May 15) 
 
New Shareholders in Lariba Bank 
------------------------------- 
 
¶3.  The son of Financial Police head Sarybay Kalmurzaev and the son 
of Tourism and Sport Minister Temirkhan Dosmukhambetov respectively 
acquired 39.82 percent and 10.18 percent stakes in Lariba Bank. 
Respublika newspaper estimates the two stakes cost at least $7 
million.  Lariba Bank began operations in Kazakhstan in 1994. 
(Respublika newspaper, May 2) 
 
New Prospects for Economic Cooperation with Tajikistan 
--------------------------------------------- --------- 
 
¶4.  Tajik President Rakhmon's recent visit to Astana resulted in 
plans for economic cooperation during 2008-10 which include a $100 
million Kazakhstani commitment to create a joint investment fund for 
projects in various sectors of the Tajik economy, such as 
electricity, agriculture, and mining.  (Interfax-Kazakhstan, May 
13) 
 
Jordanian Investment on the Caspian Sea Coast 
--------------------------------------------- 
 
¶5.  Development of the Kenderly resort zone on 1,700 hectares of 
land in Mangistau oblast will be primarily funded by Jordanian 
investors.  In addition to hotel construction, the foreign investors 
will be responsible for building the necessary roads and water 
supply systems.  The project's estimated cost is $2.3 billion, with 
about 330,000 tourists expected annually once the resort zone is 
completed.   According to a representative of the Mangistau 
Investment Company, which is also a partner in the project, the 
Kenderly resort zone will be a pioneer project for the Caspian 
region.  (Interfax-Kazakhstan, May 7) 
 
Delegations from Lithuania and Japan Discuss Energy 
--------------------------------------------- ------ 
 
¶6.  At a meeting in Astana with Lithuanian Prime Minister Kirkilas, 
President Nazarbayev said that Kazakhstani companies would supply 
fuel for a new nuclear power plant to be built in Lithuania. 
Kirkilas invited Kazakhstani companies to take part in building a 
liquefied natural gas terminal in Lithuania.  (Kazakhstan Today, May 
13) 
 
¶7.  Energy Minister Mynbaev and Japan's Parliamentary Secretary for 
Economy, Trade, and Industry Kanae Yamamoto signed a memorandum to 
enhance the strategic partnership of the two countries in the area 
of civil nuclear power.  Yamamoto said that uranium mining at 
Western Mynkuduk, the first uranium deposit in Kazakhstan developed 
with investment from a Japanese company, will commence in June.  A 
second joint project, the Kharasan deposit, will be inaugurated 
later.  (Reuters, May 5) 
 
 
ASTANA 00001073  002 OF 002 
 
 
Eurasian Natural Resources Purchases Foreign Stakes 
--------------------------------------------- ------ 
 
¶8.  Eurasian Natural Resources Corporation (ENRC) is buying a 50 
percent stake in Xinjiang Tuoli Taihang Ferro-Alloy Co. Ltd, a major 
ferrochrome producer in China with annual production capacity of 
120,000 tons, for $14.5 million.  Approximately 70 percent of the 
chrome used by the Chinese company is supplied by ENRC.  ENRC also 
announced the acquisition of a 50 percent interest in Brazil's Bahia 
Mineracao Limitada (BML), which is exploring iron ore deposits in 
Bahia State, for $300 million.  By 2012, BML's field is expected to 
produce 20 million tons of ore per year.  (Panorama newspaper, May 
9) 
 
Economic and Energy Statistics 
------------------------------ 
 
¶9.  April-on-April inflation from 2007 to 2008 was 19.1 percent, 
which is the highest year-on-year inflation rate in recent years. 
The month-on-month inflation rate from March to April 2008 was 0.9 
percent, as compared to 0.6 percent from February to March.  The 
month-on-month price increase is attributed principally to increases 
in prices on food products (1.0 percent), non-food products (0.8 
products), and paid services (0.7 percent).  (Interfax-Kazakhstan, 
May 4) 
 
¶10.  According to the National Statistics Agency, Kazakhstan's 
industrial production rose 3.5 percent on a year-on-year basis for 
the January-April 2008 period.  Year-on-year growth in mining was 
6.3 percent, and in utilities (electricity, gas, and water) was 7.9 
percent.  (Interfax-Kazakhstan, May 13) 
 
¶11.  The National Statistics Agency also reported that crude oil 
production increased 6.6 percent year-on-year during January-April 
2008, totaling 19.32 million tons for that period.  Gas condensate 
production rose 4.7 percent to 4.34 million tons.  Natural gas 
production grew 15.6 percent to 11.477 billion cubic meters. 
Kazakhstan extracted 37.76 million tons of coal during 
January-April, a 19.7 increase year-on-year.  (Interfax-Kazakhstan, 
May 16) 
 
ORDWAY