Kazakhstani Industries Refuel at 6.4% Expansion Rate, Driven Primarily by Oil and Manufacturing Sectors
**Kazakhstan's Mining and Manufacturing Sectors Thrive Amid Challenges**
Kazakhstan's industrial sector is experiencing significant growth, with the mining and manufacturing sectors leading the charge. According to recent data, the mining sector expanded by 7.8% year-on-year, contributing about 12% to the country's GDP. The manufacturing sector, meanwhile, grew by 6%, contributing 11.9% to the GDP.
The growth in these sectors is driven by several key factors. Restart and expansion of mining operations have played a significant role. Kazakhmys' resumption of copper production at the Zhomart mine has boosted Kazakhstan's position in the global copper market. Zijin Mining's acquisition of the Raygorodok gold mine and planned investments in exploration, processing technology upgrades, automation, and energy system modernization are also contributing to the sector's expansion.
Moreover, technological modernization and sustainability are critical to the sector's growth. Investments in automation, improved metal recovery, and the incorporation of renewable energy in mining operations are extending mine life and enhancing operational efficiency. ESG (Environmental, Social, Governance) factors are also shaping mining strategies due to stricter environmental regulations and growing demand from global buyers for sustainable sourcing.
Kazakhstan's economy is also diversifying, with the government investing about $100 billion to support the building of a non-resource-based growth model. This strategic push towards industrial diversification is expected to drive broader manufacturing sector growth beyond raw resource extraction.
However, the mining and manufacturing sectors are not without challenges. Declining ore grades, environmental and regulatory pressure, water scarcity, global market competition, and geopolitical and economic volatility are all concerns that need to be address. For instance, mature mining deposits show declining ore quality, necessitating more advanced technology and higher input costs to maintain output. Increasingly stringent environmental regulations require sustainable mining practices, adding operational complexity and cost. Water shortages in mining regions could constrain operations and require investment in water management. Rising competition from emerging producers might affect Kazakhstan’s market share and pricing power. External geopolitical tensions and macroeconomic risks remain concerns influencing investment and demand patterns.
In the coming months, these sectors will need to balance growth ambitions with sustainable practices and operational adaptations to resource constraints and market fluctuations. Kazakhstan’s strategic investments in technology, infrastructure, and diversification efforts are critical to overcoming these challenges and sustaining sector growth.
Notable regional growth was observed in the Zhambyl and Zhetisu Regions and Shymkent city. Food production in the manufacturing sector increased by 10.5%, while ferrous metallurgy grew by 3.4%. Mechanical engineering also saw a growth of 10.5%. However, the water supply and waste management sector declined by 6.2% year-on-year in the first half of 2025.
The growth in the mining sector had a widespread economic impact. It boosted related outputs such as diesel, gas, fuel oil, and petroleum coke. The expansion of the mining sector also drove wholesale trade and transport activity. On the other hand, the energy sector experienced minimal growth (+0.1%) year-over-year, with the value of electricity transmission and distribution decreasing.
In conclusion, Kazakhstan's mining and manufacturing sectors are experiencing robust growth, driven by strategic investments and diversification efforts. However, these sectors face challenges that require careful management and adaptation to ensure sustainable growth and maintain the country's competitive edge.
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The expansion of mining operations, including Kazakhmys' resumption of copper production and Zijin Mining's investments in the Raygorodok gold mine, has positioned Kazakhstan firmly in global finance markets like copper. Technological advancements in the energy sector, such as the incorporation of renewable energy in mining operations, are essential for extending mine life and boosting operational efficiency, thereby contributing to the overall economic growth of Kazakhstan.
