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DE RUEHTA #0852/01 1351055
ZNR UUUUU ZZH
O 151055Z MAY 09
FM AMEMBASSY ASTANA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 5433
INFO RUCNCIS/CIS COLLECTIVE 1594
RUCNCLS/ALL SOUTH AND CENTRAL ASIA COLLECTIVE
RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUEHBJ/AMEMBASSY BEIJING 0971
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RHEFAAA/DIA WASHDC
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RHMFIUU/CDR USCENTCOM MACDILL AFB FL
RUEHAST/USOFFICE ALMATY 1529

UNCLAS SECTION 01 OF 02 ASTANA 000852 
 
SENSITIVE 
SIPDIS 
 
STATE FOR SCA/CEN, EAP/CM, EEB/ESC 
STATE PLEASE PASS TO USTDA FOR DAN STEIN 
 
E.O. 12958: N/A 
TAGS: PGOV PREL ECON ENRG EPET EINV RS CH KS KZ
SUBJECT:  KAZAKHSTAN:  KOREAN PRESIDENT LEE'S STATE VISIT PROMOTES 
TRADE AND INVESTMENT 
 
REF:  (A) SEOUL 0753 (B) ASTANA 0555 (C) ASTANA 0678 
 
ASTANA 00000852  001.2 OF 002 
 
 
¶1.  (U) Sensitive but unclassified.  Not for public Internet. 
 
¶2.  (U) SUMMARY:  On May 12, South Korean President Lee Myung-bak 
arrived in Kazakhstan for a three-day state visit (reftel A).  Lee 
and Kazakhstan's President Nazarbayev signed a series of documents 
during the visit, including a joint action plan to strengthen 
bilateral relations.  On May 13, Kazakhstan hosted a business forum 
in Almaty for South Korean investors, who agreed in principle to 
invest in projects totaling more than $5 billion over the next five 
years.  Trade between the two countries totaled $754 million in 
2008, including $330 million in exports from Kazakhstan and $424 
million in imports from South Korea.  Overall, this represented a 
decline of 10.5% compared to 2007.  The majority of Kazakhstan's 
exports to South Korea consist of raw materials such as uranium, 
ferroalloys, rolled plain carbon steel and iron, gold and copper. 
Imports from South Korea include mainly electronics, manufacturing 
equipment, and engineering products.   South Korean companies are 
partners in more than 300 joint ventures in Kazakhstan.  According 
to the National Bank, from 1993-2008, South Korean companies 
invested more than $3 billion in Kazakhstan, or 3.6% of total 
foreign direct investment in Kazakhstan during that period.  END 
SUMMARY. 
 
ANOTHER BILLION-DOLLAR INVESTMENT PACKAGE FOR KAZAKHSTAN 
 
¶3.  (U) On May 13, Kazakhstani and South Korean businesses signed a 
number of agreements at a forum in Almaty that could bring more than 
$5 billion of new investment to Kazakhstan.  Kairat Kelimbetov, 
President of the Samruk-Kazyna National Welfare Fund, confirmed the 
figure of $5 billion, but he said it covered future investments in 
Kazakhstan over the next two to five years.  Kelimbetov announced 
that Samruk-Kazyna had signed memoranda of understanding (MOUs) with 
Korean companies Hyundai, KZPOS Company Ltd., Daewoo Engineering 
Company, and Bokwang Gid Company.  Bokwang Gid intends to invest in 
the uranium mining, coal mining, power generation, oil and gas, 
transportation, and engineering sectors.  In addition, a number of 
Kazakhstani and Korean companies signed statements of intent to 
cooperate, including Kazakhmys and Samsung; KazMunaiGas and Hyundai; 
Kazakhstani national railroad company Temir Zholy and the Korean 
Railroad Corporation (KORAIL); and SaryArka CEC and Korea Resources 
Corporation.  National telecommunications company Kazakhtelecom 
agreed to cooperate with the Korean scientific institution ETRI in 
the development of broadband Internet, WiBro global 3G, and 
e-learning services. 
 
FURTHER DETAILS ON RAILWAY COOPERATION 
 
¶4.  (U) On May 14, KORAIL said it signed an agreement with Temir 
Zholy on areas of broad cooperation that it expects will lead to 
significant business opportunities in the future.  The memorandum of 
understanding signed in Astana by KORAIL President Huh Joon-young 
and his Kazakhstani counterpart, Askar Mamin, calls for the joint 
development of transcontinental railway lines and the modernization 
of Kazakhstan's logistics infrastructure.  It also includes 
provisions for KORAIL to participate in railroad construction and 
operations in Kazakhstan, as well as the joint development of 
information technology systems to improve rail operations.  Huh said 
the deal is significant because "Kazakhstan is rich in natural 
resources and located along the main railway line crossing the Asian 
continent."  He added that KORAIL plans to examine the feasibility 
of other projects, including introducing its KTX-II bullet trains, 
and will prepare a package deal with other South Korean companies to 
bid for future business.  According to KORAIL, Kazakhstan plans to 
acquire 23,000 rail trucks and 500 locomotives, and refurbish 3,000 
km of existing railways by 2013. 
 
SOUTH KOREA'S RESOURCE DIPLOMACY 
 
¶5.  (U) On May 5, Kazakhstan's Ambassador to South Korea, Darkhan 
 
ASTANA 00000852  002.2 OF 002 
 
 
Berdaliyev, was interviewed by Liter newspaper about South Korea's 
"resource diplomacy."  He said that Kazakhstan has become a 
strategic investment destination for Korean capital as global 
competition intensifies for limited natural resources.  In 
particular, he cited the energy, agriculture, and mining sectors as 
areas of interest to Korean businesses.  Berdaliyev said he expects 
future investment to follow the selection of Samsung C and T 
Corporation to construct a $2.5 billion, 1,500 megawatt thermal 
power plant in Balkhash (reftel B).  He said the project is 
strategically important to Kazakhstan because it will help ensure 
the country's energy security and offered it as proof that 
Kazakhstan continues to maintain an attractive investment climate 
despite the global economic crisis. 
 
¶6.  (SBU) COMMENT:  The announcement that South Korean companies are 
prepared to invest as much as $5 billion in Kazakhstan over the next 
five years comes close on the heels of China's $10 billion 
loan-for-oil deal on April 16.  Both announcements were tied to 
state visits, involve investments from state-owned and 
state-directed companies, and represent package deals in a wide 
range of sectors, including -- but not limited to -- the energy 
sector.  These deals demonstrate that Kazakhstan continues to seek 
investment from all directions -- consistent with the country's 
multi-vector foreign policy -- and has no intention of putting all 
its eggs in one basket.  END COMMENT. 
 
MILAS