Central Asia Metals Blazes A CSR Trail In Kazakhstan

Thursday, 16 April, 2015

“We do lots of stuff in the local area”, says Nigel Robinson, the finance director of Central Asia Metals. “You’ve got to get the local support.”

It’s only a few years since Central Asia set up an operation to extract copper from waste ore at Kounrad in Kazakhstan, but a few years can be a long time both in terms of investment returns, and in terms of community and social returns.

On the first count, the company is almost at the point where it can say that it has returned all the US$60 million start-up capital it raised back in 2010 to shareholders. That return has taken the form of dividends and buybacks, and in terms both of its speed and its success is virtually unprecedented among companies at the junior end of the mining market.

But Central Asia has only managed to achieve such stunning returns by being clearly focussed. Operating in Kazakhstan is not everyone’s cup of tea, and several companies, among them European Minerals and Hambledon, have tried and failed.

The reasons for their failure have been many and varied, and have included underestimating the rigours of the climate and falling foul of government and environmental legislation.

Central Asia though has barely put a foot wrong. The company’s directors had had plenty of prior experience of Kazakhstan before they contemplated a restart at Kounrad, and knew exactly what they were letting themselves in for.

Hence, there have been no unscheduled winter stoppages and production rates have risen consistently year-on-year. And hence, there have been no objections locally, no conflict with landowners or local communities. On the contrary, what there has been is constant dialogue and a not inconsiderable investment in those communities.

“We’ve got strong links to the local communities”, says Nigel. “We’ve been painting up schools, fixing up internet, we’ve contributed to repairs to a boiler, and we’ve spent around US$280,000 on social programmes locally”.

What’s more, the emphasis is on ensuring that Kounrad is as much a Kazakh-run operation as it can be. “We only employ two expats”, says Nigel. “One of them is a CSR director. His role is to try and educate our own staff and show that we’re trying to give something back. We try and be as socially responsible as we can.”

So it was that when the local mayor came looking for assistance with a clapped out boiler, Central Asia was happy to step in and help. After all, in Kazakhstan, where the winters can be punishingly cold, a malfunctioning boiler is a very serious matter.

And Central Asia has some expertise in boilers, having installed and successfully operated several at Kounrad as part of a build-up to 14 Megawatts in installed capacity which allows production to carry on even in very cold conditions. But a boiler is not cheap.

“Our latest cost us US$1.4 million”, says Nigel, and even for a profitable company like Central Asia, that sum is beyond the bounds of the current CSR budget. Repairmen and parts are eminently affordable though, and both were duly supplied and delivered, to the general satisfaction of a now warmer community.

“It’s always a judgement call”, says Nigel, regarding the scope and scale of Central Asia’s CSR programmes. And he adds, for good measure, that it’s not just through CSR that Central Asia contributes to Kazakhstan. “We’ve paid US$50 million in taxes to the Kazakhstan government”, he says.

What with employment, CSR, and tax, it’s easy to see why the Kazakhs have in recent years been encouraging more miners to come and do business in their country. If only every company was as clued up out Kazakhstan as Central Asia, it would be a no brainer all round.