Between Critical Raw Materials And Oil, Kazakhstan Is Becoming A Regional Partner – OpEd

Critical raw materials play a crucial role in the production of low-carbon energy. This is why the EU is turning towards the use of these minerals and thus importing them from producing countries. Among other things, it is clear that the EU is seeking to find new partners producing raw minerals, among which is Kazakhstan. Moreover, at the end of 2024, in Brussels, several events, round tables, discussions, and meetings have facilitated bilateral exchanges between the EU and Kazakhstan regarding cooperation in terms of raw minerals. 

Currently, Kazakhstan, as the world’s largest producer of uranium for commercial use and as a country with a positive image in the fight against nuclear weapons proliferation is experiencing remarkable economic growth and is increasingly getting closer to the European Union.

Furthermore, Kazakh Ministry of Industry and Construction has announced new projects for exploring and extracting rare and rare-earth metals, reported Kazinform. The country has signed strategic agreements with big powers such as the European Union, the United Kingdom, South Korea, Japan, and China to develop its rare and rare-earth mining and production sector. Moreover, German company HMS Bergbau AG is conducting geological exploration at the Akhmetkino lithium deposit, with an estimated investment of $8 million. The ministry of Industry and Construction in Kazakhstan estimates that the total investment could reach $500 million if reserves are confirmed according to Astana Times.

The EU and Kazakhstan, Essential Partners

Since Kazakhstan’s independence, the EU has been one of its main political and economic partners. Indeed, the European Union is Kazakhstan’s main partner in terms of trade and investment. It accounts for half of Kazakhstan’s foreign trade turnover and has attracted foreign capital into the country’s economy according to academic data. Kazakhstan has long been considered a major exporter of fossil energy, particularly to the EU. In December 2015, they strengthened their ties by signing the Enhanced Partnership and Cooperation Agreement (EPCA). This is the first such agreement signed by the EU with a Central Asian partner. Before the war in Ukraine, Kazakhstan was the EU’s third-largest oil supplier, after Russia and Norway, meeting 6% of its demand. Europe was by far its largest market, consuming 70% of its oil exports. 

Kazakhstan is also the EU’s largest supplier of nuclear energy, meeting more than 21% of its uranium demand. On their side, European multinationals are heavily involved in Kazakhstan’s hydrocarbon production. French oil and gas majors Total, British Dutch Shell, and Italian Eni alone hold just over 50% of the shares in the Kashagan field, each with 16.81%. Eni also holds a 29.25% stake in the Karachaganak field and Shell 50% in the Arman field, etc

Orientation towards the Energy Transition of the EU and Central Asia

In 2019, the European Union adopted a ‘Green Deal’ plan for the transition to renewable energies. This plan includes a series of policies and subsidies aimed at increasing research and investments in clean technologies. The program involves a structural transformation of the EU’s energy system. Between 2030 and 2050, the EU plans to completely eliminate oil and reduce gas consumption to only one-tenth of its energy needs.

The Energy Transition of Kazakhstan

Kazakhstan has committed to achieving climate goals to combat climate change, despite its carbon-intensive economy dominated by natural resource extraction according to KazEnergy. 

Since the week organized in Brussels, the capital of the European Union, on cooperation between the EU and Kazakhstan regarding raw minerals, a bilateral interest has been highlighted in increasing EU-Kazakh cooperation concerning raw minerals. Before delving deeper into this interest, it will be pertinent to define the term. In reality, EU-Kazakh cooperation in terms of raw materials has intensified since that date. On 7 November, in the margins of COP-27 in Egypt, the president of the European Commission and the prime minister of Kazakhstan signed the Memorandum of Understanding between the EU and Kazakhstan on a strategic partnership in the field of raw materials, batteries, and renewable hydrogen, as mentioned on the official page of the European Commission.

In Kazakhstan, 16 of the 22 critical materials have high geological potential, making it a key source country for materials for clean energy technologies in the region. It holds 30.07% of the world’s chrome reserves, 20% of lead reserves, 12.6% of zinc reserves, 8.7% of titanium reserves, 5.8% of aluminum reserves, 5.3% of copper reserves, 5.3% of cobalt reserves, and 5.2% of molybdenum reserves. Central Asian countries are already among the top 20 global producers of many essential materials.

Kazakhstan possesses the largest reserves in the world and is the second-largest producer of chromium, which is used in wind turbines. The country’s reserves are estimated at 230 million metric tons, while global reserves amount to 570 million metric tons. Kazakhstan has the fifth-largest zinc reserves and the eighth-largest ore reserves in the world, and is among the top 20 countries in terms of proven reserves of copper, cadmium, and bauxite. The reserves of certain elements, such as lithium, require further geological exploration in Kazakhstan, as existing data were collected during the Soviet period and remain incomplete.

Among critical raw minerals, the topic of hydrogen is most frequently cited. First, it is important to understand what green hydrogen is. Green hydrogen can be produced from the electrolysis of water powered by low-carbon electricity sources such as wind turbines and solar panels. Kazakhstan is a country with significant reserves of raw minerals and particularly hydrogen. The country has already concluded agreements with the EU on the supply of “green” hydrogen. A “green” hydrogen production plant by the German-Swedish company “SVE VIND” will be built in the Mangystau region. Kazakhstan thus occupies a prominent position in the implementation of the EU’s hydrogen diplomacy.

Finally, Kazakhstan, being an OPEC+ member, has taken all necessary steps to fully meet its OPEC+ obligations in February, Energy Minister Almassadam Satkaliyev said at a virtual meeting held on March 3, the ministry’s press service reported. Surging output from Kazakhstan saw the Opec+ alliance overshoot its collective crude production target in February for the first time in eight months. Kazakhstan’s production rose by 220,000 b/d to a record 1.75mn b/d in February, driven by the start-up of a new production unit at the Chevron-led Tengiz oil project. This helped boost Tengiz production to 878,000 b/d in February and put the country a whopping 280,000 b/d above its Opec+ target. 

In conclusion, the EU is genuinely seeking to increase its share of critical minerals imported from Kazakhstan. Kazakhstan is the EU’s main supplier of phosphorus, accounting for 72% of the EU’s supplies; however, phosphorus is not on the list of critical minerals for clean energy technologies. This is why, at the end of 2024, the EU and Kazakhstan sought to intensify round tables to increase cooperation in terms of rare materials. On a global level, as an active and key member of OPEC+, Kazakhstan is showing that it is set to become a regional power that will play a global role in both Europe and Asia.

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Kazakhstan pushes Opec+ output above target | Latest Market News

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