Umit GumustenAs the world shifts towards renewable energy, the demand for critical minerals like nickel, copper, and lithium is surging. At the heart of this global scramble lies Kazakhstan, a nation rich in these essential resources. Neighboring China, the leading producer of electric vehicles and batteries, is particularly keen to secure a steady supply from this Central Asian country.
A Strategic Neighbor
Kazakhstan, a former Soviet Republic, maintains close trade ties with Russia. However, China has emerged as a more significant economic partner, driven by its voracious appetite for critical minerals. These minerals are indispensable for the production of electric vehicles, batteries, and solar panels—industries where China leads globally.
Despite Kazakhstan’s historic connections with Russia, the country has made it clear that it seeks diversified partnerships. Recent agreements with the European Union and the United Kingdom highlight its efforts to attract Western investment in its mining sector. The United States has also shown interest, initiating discussions with Kazakhstan and other Central Asian nations this year.
China’s Broader Ambitions
China’s interest in Kazakhstan extends beyond minerals. As part of its Belt and Road Initiative, Beijing has invested billions in Kazakhstan’s infrastructure, aiming to streamline trade routes to Europe. This includes significant upgrades to Kazakhstan’s railways and the construction of the Khorgos Gateway on the Chinese-Kazakh border, the world’s largest dry port.
Kazakhstan’s western Caspian Sea port city, Aktau, has also seen Chinese investment, transforming it into a vital container hub. These infrastructure projects facilitate faster and more efficient trade between China and Europe, cutting transit times significantly compared to traditional sea routes.
Economic Influence and Local Sentiments
China’s economic footprint is increasingly visible in Kazakhstan. In Almaty, the country’s wealthiest city, Chinese electric vehicle dealerships are becoming a common sight. During a recent visit, Chinese President Xi Jinping emphasized the goal of doubling bilateral trade by expanding cooperation in critical mineral sectors.
However, this burgeoning economic relationship is not without its challenges. Anti-Chinese sentiment persists among some Kazakhs, fueled by China’s treatment of Uyghurs and other Muslim groups, including ethnic Kazakhs, in Xinjiang. This human rights issue resonates deeply in Kazakhstan, where about two-thirds of the population is Muslim.
Kazakhstan’s Economic Evolution
Kazakhstan’s journey since gaining independence from the Soviet Union has been marked by its reliance on natural resources. The country is a major exporter of oil, uranium, chromium, gold, and copper. However, historical challenges such as bureaucracy, lack of transparency, and corruption deterred many foreign investors.
Recognizing these issues, Kazakhstan reformed its mining laws in 2018, drawing inspiration from Australia’s investment-friendly regulations. Despite these efforts, the influx of foreign investment remained modest, further hampered by the COVID-19 pandemic and domestic political unrest.
Under President Kassym-Jomart Tokayev, who solidified his leadership after quelling the protests with Russian assistance, Kazakhstan has committed to enhancing business privatization, tackling corruption, and curbing monopolistic practices. Tokayev has emphasized the importance of developing rare and rare-earth metals, dubbing them the “new oil” for Kazakhstan.
A Growing Western Interest
The West’s interest in Kazakhstan’s mining potential is gathering momentum. Kaisar Kozhamuratov, a partner at Aurora Minerals Group, likened this growing interest to a “snowball rolling down a hill.” The number of exploration licenses issued this year is set to nearly double the average annual amount of the past six years, indicating a significant uptick in foreign investment.
The New York Times’ article helped me a lot in writing this article. For a more comprehensive read, I recommend you read NYTimes’ article on this subject.
