Kazakhstan, Japan Launch New Projects Beyond Energy

ASTANA – Kazakhstan and Japan have agreed at a recent Tokyo meeting to dramatically expand their industrial cooperation and launch a new series of joint ventures beyond the energy sector.

The projects will raise Japan’s investment in Kazakhstan’s industry, oil, gas and nuclear industries to a whole new level.

Nine bilateral documents were signed at the fourth meeting of the Joint Commission of Kazakhstan and Japan on Economic Cooperation on Feb. 18 in Tokyo.

Deputy Prime Minister and Minister of Industry and New Technologies Asset Issekeshev led Kazakhstan’s delegation to the commission. The Japanese side was led by Nobuhiko Sasaki, vice-minister of international affairs at the Ministry of Economy, Trade and Industry. He is also co-chairman of the Joint Bilateral Commission.

The commission discussed the mining and processing of uranium, rare earth metals, iron and non-ferrous metals, as well as oil and gas development.

The participants agreed to construct new industrial facilities in Kazakhstan in the fields of IT and communications, machine tools, space exploration, medicine and biotechnology. They also explored further cooperation on protecting the environment from the side-effects of energy projects and discussed expanding the country’s use of energy-saving technologies such as thermocouples, solar cells, next-generation batteries, and light-emitting diode (LED) light bulbs.

In Tokyo, Kaznex, the government agency responsible for promoting non-resource exports and attracting more foreign investment to the Central Asian republic, signed Memoranda of Understanding (MoUs) with the Chiyoda Consulting Company on a plant to make molybdenum powder and plates with a production capacity of 120 tons per year, and with the Sumitomo Corporation on energy projects.

The provincial government of the Zhambyl region signed a MoU with the Cokey Systems Company to make a factory to process licorice for domestic sales and for export.

Kazakhstan Steel (KSP) signed a new deal with its Japanese partners for new projects in the domestic oil and gas industry and to boost steel exports.

Dala Mining and the Itochu Corporation agreed on a new project to mine and process tungsten-molybdenum ore at the Koktenkol deposit in the Karaganda region.

The National Nuclear Center signed MoUs with the Japan Atomic Energy Agency (JAEA) and the Japan Atomic Power Company (JAPC) to carry out a feasibility study on building a nuclear power plant in Kazakhstan.

In his Facebook entry from Tokyo, Minister Issekeshev wrote, “The first day in Tokyo was successful. The forum brought together more than 350 people, including 140 businessmen from Kazakhstan. The Kazakhstan Chamber of Commerce and personally Sabr Esimbekov, its president, brought a good group of businessmen from the regions, many small and medium-sized enterprises. The Kaznex Invest organized everything well.”

“Toshiba and Sumitomo have invested already. Toyota Motors starts working. Substantive negotiations on large industrial projects have been conducted with Itochu, Marubeni and Mitsui. If these five major business empires start serious work in Kazakhstan, a wave of Japanese companies will follow them,” Issekeshev continued. “And, of course, a major conversation took place on the issue of technology transfer. For example, one major steel company will work through a unique technology that recycles industrial gases from the production, cleans and receives chemical products, particularly ethanol, at a price lower than diesel. FS (feasibility study) is currently underway.”

Issekeshev also noted, “There are many technologies in energy, industrial automation, and use of new materials. And it is very important for us to complete negotiations on an investment protection agreement, so that a legal framework is fully developed, without which the Japanese do not move.”

In an interview with The Astana Times, Sabr Esimbekov, the Kazakhstan Chamber of Commerce president said: “Our chamber aims to promote and protect Kazakhstan’s small and medium-sized enterprises. This work includes the organization and participation in the so-called Business Councils with business communities of different countries. Currently, the Kazakh-German Business Council, the Kazakh-French, the Kazakh-Austrian, the Kazakh-Turkish and others are actively developing. I head the Kazakhstan-Japan Business Council. The essence of its work is to ‘measure temperature’ of bilateral economic cooperation. Our Council acts as a ‘window’ for businessmen of two countries to promote the ideas of how to improve interstate procedures to facilitate trade contacts, and to increase the flow of goods and services. At the forum in Tokyo we managed to gather a very large delegation – nearly 100 people, including chairmen of the regional Chambers of Commerce, SMEs, research institutes, etc. There were some very serious fruitful discussions. I hope all this will result in good projects. We have something to offer to Japan, and above all – technology.”

Since establishing diplomatic relations with Kazakhstan, Japan has provided around one billion dollars in official development assistance, making it one of the largest foreign aid donors. These funds have helped Kazakhstan close the Soviet nuclear test site at Semipalatinsk, manage its water resources, and develop its transportation and other infrastructure, including reconstructing Astana International Airport. In the last few years, the relationship has become more balanced, with Kazakhstan offering Japan important natural resources and investment opportunities. Private Japanese companies now invest more in Kazakhstan than Japan’s government. The Japanese ambassador to Astana, Yuzo Harada, has said that his country’s firms have found Kazakhstan’s business environment increasingly attractive in recent years.

According to Richard Weitz, Senior Fellow and Director of the Center for Political-Military Analysis at the Washington-based Hudson Institute, the Kazakhstani-Japanese partnership “appears to be a natural fit. Japan is eager to access Kazakhstan’s rich mineral and energy resources, which include oil, gas, uranium and various rare earth minerals, while Kazakhstan wants to diversify its economic ties, obtain advanced Japanese technology, and strengthen its own Asian “pivot.”

According to Kaznex Invest, trade turnover between Kazakhstan and Japan during the past five years 2008-12 amounted to $7 billion, with Kazakhstan importing $3.4 billion in Japanese goods and exporting $3.5 billion in goods to the East Asian nation. Bilateral trade grew by 50 percent between 2010 and 2011, to $1.6 billion. Japanese total direct investment in Kazakhstan has exceeded $4 billion since 1994, with some 45 active Japanese projects worth about $26 billion and more than 70 Kazakhstani-Japanese joint ventures, many involved in the mining of uranium and rare earth metals. Japan’s Inpex Corporation is one of the seven largest international oil and gas companies that are developing Kazakhstan’s enormous Kashagan field in the Caspian, and owns 7.6 percent of the shares in the consortium.

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