Kazakhstan: Oil Ministry to go softly on mining companies

Perhaps reflecting the labour movement's growing influence, the Oil and Gas Ministry has announced that wayward mining firms will be fined rather than have their contracts terminated, in a bid to safeguard jobs.

Announcing the decision at the end of November, ministerial secretary Kanatbek Safinov said that, “The termination of contracts will be used as a last measure, as in this case people will lose their jobs.” Instead, the government will prioritise economic sanctions against mining firms which violate their contracts, in accordance with last year's new subsoil law. Closer monitoring of mining companies will be undertaken, according to Safinov, and the termination of contracts is held out as a last resort.

Safinov gave no indication of how the extra monitoring will be carried out, or whether the process of appealing against fines will be toughened up, which may raise a few eyebrows among mining companies. Focusing on the livelihoods of mining employees may be a genuine populist touch, but fining companies rather than terminating contracts – 28 subsoil contracts were cancelled last year – is also undoubtedly a money-spinner for the state coffers.

For more news and expert analysis about the Caspian region, please see Caspian Focus.

© 2011 Menas Associates