Kazakh oligarch shakeup may give foreigners a shot

Natsional'naya Atomnaya Kompaniya Kazatomprom AO

12/01/2022 09:55

(The author is a Reuters Breakingviews columnist.  The opinions
expressed are her own.)
    By Dasha Afanasieva
    LONDON, Jan 12 (Reuters Breakingviews) - In the midst of
chaos lies opportunity. Profit-hungry investors will have the
Sun Tzu aphorism in mind as Kazakh President Kassym-Jomart
Tokayev cements his grip on power after an uprising that almost
cost him his job. Billionaires deemed close to predecessor
Nursultan Nazarbayev are easy targets for more aggressive state
revenue-raising. In time, that may give foreigners a look-in.
    International investors have so far had a rough ride in the
Central Asian nation, dominated by the Nazarbayev family since
independence from the Soviet Union three decades ago. Problems
like a long profit-sharing dispute between the state and oil
majors in the Karachaganak oil field serve as a warning. Mooted
privatisations of companies like national carrier Air Astana and
telecoms group Kazakhtelecom also failed to materialise. The one
major initial public offering, of $9 billion Kazatomprom
 KAPq.L  in London, omitted some of the uranium miner’s key
assets.
    In his two years in power, Tokayev has hardly cast himself
as an economic reformer. But the threat of more unrest will keep
the former diplomat on his toes. Given that the initial spark
for the protests was the scrapping of a fuel subsidy, his quest
for legitimacy thus lies in at least trying to boost living
standards by raising more revenue  urn:newsml:reuters.com:*:nL1N2TR08P.
    Hemming in those who made fortunes under Nazarbayev is thus
the obvious step politically and fiscally. Imposing higher
taxes, as Tokayev hinted on Tuesday he might do, on tycoons
invested in miners like Kazakhmys and ERG, the successor of
disgraced miner ENRC, or Kazzinc, which is majority owned by
London-listed Glencore  GLEN.L , could kill another bird if it
pushed them into selling down their stakes.
    There’s no obvious clique of businessmen that Tokayev might
want as replacements. That’s a potential opportunity for
multinationals – assuming the state becomes an interim custodian
of the tycoons’ former stakes, it may at some point need to sell
them on. That said, Tokayev has no reason to rush his shakeup.
Go too fast or too hard and he risks dangerous pushback from
Nazarbayev loyalists. A controlled squeeze that gradually brings
foreigners on board is his best chance of success.
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Twitter
    
    CONTEXT NEWS
    - Kazakh President Kassym-Jomart Tokayev ordered his
government on Jan. 11 to extract greater tax revenue from the
mining sector, which he said was profiting from higher metals
prices.
    - “In exchange we can provide large incentives for the
exploration and development of new deposits for large mining and
other companies,” he said, without providing further details.
    - Tokayev also said Russian troops deployed to help quell
nationwide unrest would start leaving this week. Protests were
initially sparked by higher fuel costs, but snowballed into
violence and looting that resulted in at least 164 deaths and
nearly 10,000 arrests.

 (Editing by Ed Cropley and Oliver Taslic)
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