On December 22, 2016, the Dossier on the Draft Code of the Republic of Kazakhstan "On Subsoil and Subsoil Use" ("Draft Code") was submitted to the Majilis of the Parliament for consideration of the Majilis of the Parliament.The draft Code provides for the following main innovations: 1. Introduction of the licensing institute for geological study of subsoil, use of subsurface resources, prospecting , exploration and extraction of solid minerals. In terms of mining conditions:
lack of requirements for volume and production limit;
payment of expenses for social and economic development of the region, training of local personnel, research and development work in the amounts provided for in the Draft Code;
mandatory registration of the subsoil user with the right to a land plot located on the territory of the extraction site;
the duration of the period of mining of solid minerals - up to twenty consecutive years with the right to extend not more than twenty years unlimited number of times.
In addition to the general conditions, the peculiarity of hydrocarbon production is as follows:
duration of production period - up to 25 years or up to 45 years for large and unique deposits;
the prolongation of the hydrocarbon production period will be carried out at the request of the subsoil user, provided that there are no unfulfilled obligations;
setting requirements for minimum annual costs for mining operations, expressed in monthly calculation indicators .
A new method of mining of solid minerals The draft Code introduces the concept of miner mining. This is a manual method of extracting solid minerals and minerals by means of permitted means of mechanization and other equipment, excluding the use of chemical reagents, in order to extract useful substances in the designated areas and territories. Exploration For the purposes of exploration in the Draft Code, the following general conditions are proposed:
exploration of any kinds of minerals will be carried out within the main groups of minerals: hydrocarbons, solid minerals;
block system for the formation of the reconnaissance area;
payment of lease payments at increasing annual rates for one block;
duty of subsoil users to periodically report on fulfilled obligations, works and their results;
unlimited scope of geological exploration;
the right to export samples and materials of minerals beyond Kazakhstan solely for the purposes of analysis and laboratory research;
lack of commitment to the costs of socio-economic development of the region, training of local personnel, research and development and other expenses that are not directly related to exploration operations.
Exploration of solid minerals provides the following features:
Establishment of common annual growth requirements for minimum annual costs for exploration work per unit, expressed in MCI;
The exploration period is 6 consecutive years with the possibility of extension for up to 5 consecutive years.
Geological Survey of Mineral Resources The Draft Code is expected to provide for a mechanism aimed at attracting private investment in geological exploration of subsoil. Along with the state geological study of the subsoil where the state pays and takes over all the geological risks, the Draft Code provides for the possibility of geological exploration of the subsoil by individuals on the basis of a license for geological study of subsurface resources issued by the authorized body for the study of subsoil. Improvement of the process of liquidation and conservation of the subsoil use object After completion of exploration (determination of the resource contour) or during the development (extraction) period, the Draft Code fixes the right of the subsoil user to apply the so-called "retention status" applicable to the entire deposit or part thereof. The subsoil user has the right to resort to the application of this status only with the permission of the competent authority (refusal to grant this status should be motivated, and may also be contested in court). The draft of the Code provides for temporary impossibility or unprofitability of the development of the field (part thereof) due to unavoidable objective substantiated and sustainable economic, technological and / or environmental circumstances as a basis for applying the status. The validity of the retention status is up to 5 consecutive years, with the possibility of extending for a subsequent period of up to 5 years. With respect to the same field (part of the field), the application of this status can be repeated for a total duration of no more than 10 years. During the validity period of this status:
the competent authority may require (at the discretion of) the subsoil user to prepare and agree on a program of work in accordance with which work and other measures should be carried out to find opportunities to start or resume the development of the deposit (part thereof);