Kazakhstan Code 'On Subsoil and Subsoil Use' No. 125-VI ZRK of 27 December 2017 (foundational mining-rights, uranium-licensing, and hydrocarbon-concession statute)

Mechanism

The 2017 Subsoil Code is a wholesale recodification that replaced the 2010 Law on Subsoil and Subsoil Use (No. 291-IV) and the parallel 2010 Law on Subsoil Use in Hydrocarbons. Rather than sectoral siloing, the Code adopts a unified architecture with sector-specific chapters, making it the single source of legal authority for every extractive licence issued in Kazakhstan.

Solid minerals (Chapter 3): Two-track licence award — the "first-come first-served" notification model for non-strategic deposits removes the pre-Code bureaucratic tender bottleneck for junior explorers, while the tender/auction model is retained for deposits on the State-approved strategic list. The Code also establishes a subsoil-use rights pledge regime enabling bank financing against licence security, and a transfer mechanism that gates any M&A in the sector on government consent (a provision leveraged in the 2021 Khazakhstan-Cameco Inkai JV extension and in the KMG-Kazatomprom joint-development discussions for the Moiynkum/Tortkuduk blocks).

Uranium (Chapter 4): Kazatomprom's role is codified as the state operator and mandatory participant: all uranium exploration and extraction licences require Kazatomprom involvement. The Code established the government priority pre-emption right over any uranium asset transfer. The 2025-12-26 amendment (see amendments block) subsequently raised the mandatory Kazatomprom interest floor from 50% to 75%, materially affecting the JV structures with Cameco (Inkai 40% Cameco / 60% Kazatomprom → governed by this 75% floor going forward), Orano (Katco 49% Orano / 51% Kazatomprom — unaffected as Kazatomprom already above threshold), CGN Mining (Semizbay-U; now requires renegotiation or grandfather review), and Uranium One / Rosatom (Khorasan-U, Akbastau, Karatau JVs).

Hydrocarbons (Chapter 5–6): Production-sharing agreements (PSAs) for Kashagan (NCOC: Shell, ExxonMobil, Eni, Total, CNPC, KMG, Inpex each ~16.8%), concessional contracts for Tengiz (Chevron 50%, ExxonMobil 25%, KMG 20%, LukArco 5%), and service contracts for Karachaganak (Shell, Eni, Chevron, Lukoil, KMG) all operate under the framework this Code establishes. The model contract architecture sets the royalty-rate ranges, cost-recovery principles, and state-profit-oil/gas sharing mechanisms. CPC pipeline preferential-access rules trace to the hydrocarbon chapter.

Local content and social obligations: The Code mandates Kazakh-content procurement floors (goods, works, services) across all subsoil categories, administered via the Single Operator for Local Content. Social-package obligations — minimum annual investment in local infrastructure per subsoil-use contract — create a floor expenditure for all licensees. Environmental-restoration closure bonds are mandatory from licence grant.

Downstream implications

• Every uranium JV licence in Kazakhstan — Inkai (Cameco), Katco (Orano), Khorasan-U (Uranium One), Semizbay-U (CGN) — derives its legal existence from this Code. Any investor seeking to offtake KZ uranium under the US Section 232 uranium exemption or EU EURATOM supply diversification programme must satisfy the Code's local-content and Kazatomprom-participation requirements.
• The 2025-12-26 amendment raising the Kazatomprom floor to 75% is the single most material post-Code change to the uranium chapter; it resets the governance terms of every existing uranium JV at next licence renewal.
• The KZ Comprehensive Plan for REE 2024-2028 (filed 2023-12-28) and the EU-Kazakhstan Strategic Partnership Roadmap (filed 2025-04-04) both operate under the Code's solid-minerals framework — any EU CRMA Article 9 strategic-project fast-track for KZ lithium (Zhetikara) or copper (Aktogay expansion) requires alignment with the Code's licence-transfer and local-content provisions.
• CPC pipeline flow (~1.3 mbpd KZ crude + ~0.5 mbpd Tengiz uplift) is governed by hydrocarbon contracts operating under this Code; any disruption to CPC throughput is ultimately a Code-level licensing risk.
• The first-come-first-served solid-mineral liberalisation reduced the entry friction for junior explorers into KZ gold, copper, and REE blocks, but strategic-deposit designations (under a government-approved list) revert to competitive tender — the balance between the two regimes determines how much space Western explorers have relative to Chinese-state-backed entrants.

Open questions

• The government's strategic-deposit list (determining whether a block is first-come-first-served or tender) is not exhaustively published; its scope is a recurring uncertainty for investors seeking to initiate exploration in under-explored oblasts (East Kazakhstan copper porphyries, South Kazakhstan REE occurrences).
• Post-2025-12-26 amendment: the grandfather status of existing sub-50%-Kazatomprom uranium JVs (notably Semizbay-U with CGN at 49% Kazatomprom) is under legal review; outcome will determine whether CGN must divest a portion to Kazatomprom to reach the new 75% floor.
• US Section 232 uranium tariff carve-out for KZ-origin U₃O₈ (currently under Federal Register notice) interacts directly with Kazatomprom export volumes shipped to US utilities via ConverDyn conversion contracts — any tariff application would pressure the Inkai and Katco offtake economics.