Energy & Natural Resources · Kazakhstan
Subsoil Use Agreements in Kazakhstan
Kazakhstan has substantial reserves of copper, zinc, chrome, uranium, coal and hydrocarbons, and is the world's leading producer of mined uranium. Bond Stone advises foreign investors, mining companies, and financial institutions on subsoil use transactions, from due diligence and contract structuring to M&A, joint venture governance and dispute resolution.
The legal framework governing subsoil use in Kazakhstan was comprehensively reformed by the Code on Subsoil and Subsoil Use No. 125-VI of 27 December 2017, which came into force on 29 June 2018 and replaced the Law on Subsoil and Subsoil Use of 24 June 2010. The Code moved solid minerals from the former contract system to a licence system, while hydrocarbons and uranium remain under subsoil use contracts. Solid minerals contracts concluded before the Code continue unless the holder converts to a licence. The Code also changed the state's pre-emption right, local content obligations, the transfer procedures, and the way subsoil use rights are granted. Understanding the interaction between the Code and the civil law framework — including the state's pre-emption rights, work programme obligations, and environmental closure requirements — is the foundation of any subsoil investment or acquisition in Kazakhstan.
Bond Stone advises on transactions at the operating company level — including share acquisitions, earn-in agreements, and royalty arrangements — and on investor-level structuring, including the use of AIFC-incorporated holding companies to provide English common law governance over JV arrangements, shareholder rights, and dispute resolution. Bond Stone's Almaty office covers investor-level structuring, AIFC holding arrangements, and international transaction advisory; the Astana office provides direct engagement with the Ministry of Industry and Construction, its Committee of Geology, and the AIFC regulatory framework.
Bond Stone's subsoil advisory practice covers solid minerals (copper, gold, zinc, chrome, coal, and rare earth elements), uranium, hydrocarbon-adjacent structures, and infrastructure mandates arising from large-scale mining projects, including EPC contracts, FIDIC-based construction agreements, and operations and maintenance frameworks.
Governing Framework
Code on Subsoil and Subsoil Use 2017
Primary legislation governing subsoil use licences and contracts, the grant of rights, transfer procedures, local content, the state's pre-emption right, and termination
Civil Code of Kazakhstan
Governs corporate structures, share transfers, shareholder agreements, earn-in arrangements, and the civil law obligations of subsoil user entities
AIFC Contract Regulations 2017
English common law framework applicable to investor-level agreements where AIFC law is chosen — JV shareholders' agreements, earn-in contracts, and holding company arrangements
Subsoil Use Licences and Contracts
Exploration Licence (Solid Minerals)
Grants the exclusive right to explore a defined area of blocks. Issued by the Ministry of Industry and Construction for six consecutive years, with one extension of up to five years (Article 193). Applications for the same block are considered in order of receipt (Article 189), competing applications for a newly free block are ranked by auction (Article 189-1), and plots listed in Article 221-1 are granted by auction. During the licence term the holder has the exclusive right to obtain a mining licence over a deposit it discovers (Article 201).
Mining Licence (Solid Minerals)
The primary commercial instrument for solid minerals, granting the exclusive right to extract minerals from a defined area. Plots with reserves or resources on the state register that are free of subsoil operations are granted by auction (Article 221-1). Mining licences are issued by the Ministry of Industry and Construction for up to 25 consecutive years and may be extended for a period not exceeding the original term, with no limit on the number of extensions (Article 211). The holder must meet the licence conditions, including annual minimum expenditure and local content obligations.
Hydrocarbon & Uranium Contracts
Hydrocarbons and uranium remain under subsoil use contracts with the Republic of Kazakhstan, based on model contracts (Articles 35 and 36). Hydrocarbon contracts are concluded with the Ministry of Energy after an auction or direct negotiations with the national company. The exploration period is up to six years when the contract is concluded, or 18 years for complex projects, and the production period is up to 25 years, or 45 years for large fields (Articles 116 and 119). Uranium contracts are concluded with the Agency for Atomic Energy after direct negotiations with the national company, with a production period of up to 25 years (Articles 160 and 172).
Subsoil Space Use Licence
Covers underground storage of oil, gas and their products, underground storage or disposal of waste, discharge of waters into the subsoil, water injection to replenish groundwater, and facilities for tailings and other mining waste (Article 249). Issued by the Committee of Geology for up to 25 consecutive years and renewable (Article 256). Relevant for mining infrastructure projects requiring underground storage, tailings management, or associated works.
Subsoil M&A — Acquiring Subsoil Use Rights
Acquisitions of subsoil use rights in Kazakhstan proceed by one of three routes, each with distinct regulatory requirements and pre-emption risk profiles. Bond Stone advises on transaction structuring, due diligence, state permit procedures, and the negotiation of acquisition documents at all levels of the investment structure.
Share Acquisition
Acquisition of a participatory interest (share) in the Kazakhstani subsoil user entity, or in a company able to determine its decisions. Requires a permit under Article 44 unless an exemption applies, such as an acquirer holding less than 25% after the transfer. On a strategic subsoil plot the state pre-emption right under Article 43 also applies. Bond Stone advises on threshold analysis, the permit application, and structuring acquisitions to manage timing and risk.
Transfer of the Licence or Contract
Direct transfer of the subsoil use right from one entity to another. Requires a permit from the competent authority under Article 44 and is completed by re-issuing the licence or amending the contract (Article 40). Transfers are barred in the first year of a solid minerals exploration licence and, subject to limited exceptions, in the first three years of a hydrocarbon exploration and production contract. Used where the acquisition structure requires transfer of the right itself rather than acquisition of the operating entity. Bond Stone manages the permit application and drafts the transfer agreement.
Earn-In Agreement
Private commercial arrangement under which the investor acquires a defined interest in the subsoil user entity by funding a specified work programme or capital contribution schedule. Each transfer of equity to the investor requires a permit under Article 44 unless an exemption applies, such as the investor holding less than 25% after the transfer. Bond Stone advises on earn-in structure, milestone triggers, dilution mechanics, and the choice between Kazakhstani civil law and AIFC governing law.
State Pre-Emption Right — Article 43
The state's pre-emption right (the priority right under Article 43 of the Code on Subsoil and Subsoil Use) applies only to strategic subsoil plots: a plot with geological reserves of more than 50 million tonnes of oil or 15 billion cubic metres of natural gas, a plot in the Kazakhstani sector of the Caspian Sea, or a plot containing a uranium deposit. On those plots the state ranks ahead of everyone else, including holders of statutory or contractual pre-emptive rights, when a subsoil use right or a linked share is sold, directly or through a holding company, in Kazakhstan or offshore. For other assets, including solid minerals projects with no uranium deposit, the key requirement is the transfer permit under Article 44.
Trigger Analysis
The permit requirement is triggered by a transfer of the subsoil use right or of a linked object, including shares in an offshore holding company able to determine the subsoil user's decisions (Articles 41 and 44). Securities traded on an organised market are excluded, and Article 44(2) lists further exemptions, including certain intra-group transfers. A change in the persons controlling a subsoil user must also be notified within 30 calendar days (Article 47). Bond Stone conducts a trigger analysis as the first step in any subsoil acquisition, identifying whether the transaction structure requires a permit or notification and mapping the timeline against the deal schedule.
Permit & Priority Right Procedure
The acquirer applies to the competent authority for a permit before completion, stating the price and payment terms where the priority right applies. The authority decides within one month, or three months for large deposits and strategic plots (Article 45), and considers the priority right at the same time (Article 46). If the state exercises the right, a national holding or national company buys on price and payment terms no worse than those in the application. A transfer without a permit may be declared invalid by a court on the competent authority's claim (Article 44(4)). Bond Stone manages the procedure and advises on the interaction between the review period and standard deal conditions precedent.
Strategic Significance Assessment
The list of strategic subsoil plots is approved by the competent authority in agreement with the authorised body for subsoil study (Article 43). Applications on strategic plots and large solid minerals deposits also go to the national security bodies for review (Article 45). Bond Stone advises on the strategic significance status of target assets, the consequences for transaction structure and timing, and the approval requirements applicable to strategic subsoil transactions under the Code and related regulations.
Structuring for Pre-Emption Management
Bond Stone advises on acquisition structures designed to manage permit and pre-emption risk — including AIFC holding structures, which remain subject to the rules on linked objects, phased earn-in arrangements that keep the investor below 25%, and the sequencing of state applications within the broader deal timetable. Structuring advice is provided alongside legal opinions on the permit and pre-emption right implications of the proposed transaction.
JV & AIFC Holding Structures
A common international investment structure for a Kazakhstan mining JV uses an AIFC-incorporated holding company — typically an AIFC private company, or a public company where needed — as the vehicle governing the investor-level relationship between the foreign investor and the Kazakhstani partner. The AIFC holding provides English common law governance, AIFC Court jurisdiction for investor disputes, and a predictable legal framework for management rights, exit mechanisms, and dividend repatriation. The operating entity remains a Kazakhstani LLP or subsidiary LLP holding the subsoil use licence or contract and complying with Kazakhstani subsoil and corporate law at the operating level.
Shareholders' Agreement (AIFC Law)
The AIFC holding company's shareholders' agreement governs management rights, board composition, reserved matters, drag and tag rights, deadlock resolution, and exit mechanisms under AIFC law incorporating English common law. Governing law at this level is typically AIFC law with AIFC Court jurisdiction — providing international investors with a familiar English common law framework without requiring offshore structuring.
Operating Company Charter
The Kazakhstani LLP charter must comply with the Law on Limited and Additional Liability Partnerships and include provisions aligned with the local content, personnel, and reporting obligations of the subsoil use licence or contract. Bond Stone drafts or reviews operating company charters to ensure alignment between the investor-level JV arrangements and the operating entity's statutory documents.
Royalty & Stream Arrangements
Royalty and streaming arrangements are increasingly used to finance Kazakhstan mining projects without diluting equity at the operating level. Bond Stone advises on the structure of royalty agreements — net smelter returns, gross revenue royalties, and sliding-scale arrangements — and on the interaction between royalty obligations and the subsoil user's production reporting requirements under the Code.
Exit & Change-of-Control Planning
Exit planning in Kazakhstan subsoil JVs requires advance structuring of the permit and pre-emption procedure, alignment between the shareholders' agreement exit rights and the subsoil law change-of-control requirements, and tax-efficient structuring of the divestment at the holding level. Bond Stone advises on exit mechanics from the initial JV negotiation, building pre-emption management and exit rights into the founding documents.
Selected Experience
Client identities and commercially sensitive details are withheld. Matters reflect advisory mandates.
Junior Mining · Earn-In
Junior Mining Company — Earn-In Agreement Structuring
Advised on the structuring and drafting of an earn-in agreement for a junior mining company seeking to acquire a staged interest in a Kazakhstani gold exploration project. Designed the milestone-based earn-in mechanics and the dilution and default provisions, and advised on the transfer permit at each earn-in stage and the election of AIFC governing law. Delivered the earn-in agreement and associated shareholder documents.
Earn-In · Gold · AIFC Law
Gold · JV Structuring
Kazakhstan Gold Recovery JV — AIFC Holding Structure
Prepared a structuring note for a 51/49 joint venture for a Kazakhstan gold recovery plant project, using an AIFC private company above a Kazakhstan operating company, with milestone vesting, investor protections and IAC arbitration for shareholder disputes.
JV · AIFC Holding
Copper · Cross-Border M&A
Chinese Investor — 51% Copper Project Acquisition
Acted as Kazakhstan counsel on the acquisition of a 51% interest in a Kazakhstani copper mining company by a Chinese strategic investor. Conducted subsoil title due diligence, advised on the transfer permit procedure, prepared the Kazakhstan law opinion on the transaction structure, and reviewed the share purchase agreement for Kazakhstan law compliance. Coordinated with the investor's Chinese legal advisers on cross-border structuring.
Cross-Border M&A · Copper · Kazakhstan Law Opinion
Cement · Industrial · DD
Cement Producer — Limestone Quarry Legal Due Diligence
Legal due diligence on a Kazakhstani cement plant with its own limestone quarry for a foreign industrial investor's proposed asset acquisition, covering the subsoil use contract, title, licences and permits, and a map of the transfer steps.
Legal DD · Cement · 2025
Junior Mining · AIFC · Earn-In Review
AIFC Junior Mining Platform — Model Earn-In & Royalty Review
Provided independent legal review of model earn-in and royalty agreement templates developed for a Kazakhstan junior mining financing initiative. Assessed the model agreements against the Code on Subsoil and Subsoil Use 2017, the AIFC Contract Regulations 2017, and standard international mining finance terms. Delivered a written legal review report with recommended amendments to align the templates with current Kazakhstani subsoil law and AIFC governing law provisions.
Why Bond Stone
Integrated Kazakhstan Law and AIFC Advisory
Bond Stone covers both the Kazakhstan subsoil law layer — subsoil use licences and contracts, pre-emption rights, Ministry approvals — and the AIFC investor-level structure, including AIFC holding companies, AIFC law shareholders' agreements, and AIFC Court jurisdiction. Investor-level documents are drafted in English to international standards under AIFC law, and Bond Stone's partners hold AIFC Legal Adviser status and appear before the AIFC Court, where rights of audience come from registration with the AIFC Court Registry.
Almaty and Astana Office Coverage
The Ministry of Industry and Construction (solid minerals), its Committee of Geology, and the Ministry of Energy (hydrocarbons) are headquartered in Astana. Bond Stone's Astana office provides direct engagement with the regulatory bodies governing subsoil use licences and contracts, auctions, and contract amendments.
Cross-Border Transaction Experience
The firm has advised on subsoil M&A transactions involving investors from China, Europe, and the Gulf, coordinating Kazakhstan law advisory with international co-counsel on cross-border deal structures. Kazakhstan law opinions on subsoil title, pre-emption right compliance, and investment structure are prepared in English for use in international transaction documentation.
Ranked — Legal 500 EMEA · IFLR1000
Bond Stone is recognised by Legal 500 EMEA, IFLR1000, and Asia Law Profiles. The subsoil and energy practice covers solid minerals, industrial minerals, and infrastructure-adjacent mandates across Kazakhstan, with related coverage in Uzbekistan and Kyrgyzstan through the Tashkent and Bishkek offices.
Frequently Asked Questions
What types of subsoil use rights exist under Kazakhstan law?
The Code on Subsoil and Subsoil Use uses two instruments (Article 20). Solid minerals are held under licences: exploration and mining licences, alongside licences for common minerals, geological study, subsoil space use, and artisanal mining (Article 30). Hydrocarbons and uranium are held under subsoil use contracts (Article 35). The mining licence is the primary vehicle for commercial solid minerals operations.
How does a foreign investor acquire subsoil use rights in Kazakhstan?
Through a new grant (a licence application or, for some plots, an auction for solid minerals; an auction for hydrocarbons), acquisition of a participatory interest in a subsoil user entity, or transfer of an existing licence or contract. A share acquisition or transfer generally needs a permit from the competent authority, and on strategic subsoil plots the state's pre-emption right also applies. Each route has distinct regulatory requirements and risk profiles.
What is Kazakhstan's pre-emption right on subsoil transactions?
Under Article 43 of the Code on Subsoil and Subsoil Use, the state has a priority right to acquire subsoil use rights and linked shares on strategic subsoil plots only: large oil and gas plots, plots in the Kazakhstani sector of the Caspian Sea, and plots containing a uranium deposit. The right is considered together with the transfer permit under Article 44, which the acquirer applies for and which is decided within one month, or three months for large deposits and strategic plots. A transfer without a permit may be declared invalid by a court on the competent authority's claim. Permit and pre-emption right management is a central component of every subsoil M&A mandate.
What is the difference between an earn-in agreement and a mining licence?
A mining licence is issued by the state and grants the right to extract solid minerals; hydrocarbons and uranium are produced under a contract with the state. An earn-in agreement is a private commercial arrangement between investors under which one party acquires a stake by funding a defined work programme. Earn-in agreements are governed by civil or AIFC law, but a transfer of equity under them generally requires a permit under Article 44 unless an exemption applies, such as the investor holding less than 25% after the transfer.
How is a Kazakhstan mining JV typically structured for foreign investors?
Typically via an AIFC-incorporated holding company (a private company, or a public company where needed) with an AIFC law shareholders' agreement governing investor relations, and a Kazakhstani LLP as the operating subsoil user entity. The AIFC holding provides English common law governance and AIFC Court jurisdiction; the operating entity holds the subsoil use licence or contract and complies with Kazakhstan subsoil law, including local content obligations.
What are the key local content obligations in Kazakhstan mining licences and contracts?
The Code now calls local content in-country value. Subsoil users must give preference to Kazakhstani personnel, and the in-country value of works and services set in contracts and solid minerals mining licences must be at least 70% of those purchased in a calendar year, with an exception for complex Caspian projects (Article 28). Mining licence holders must also fund training of Kazakhstani personnel and research, each at 1% of the previous year's mining costs (Article 212). Breach of a mining licence obligation carries a penalty, which for works and services is 30% of the value of the shortfall (Article 221); under a contract, the penalties are those set in the contract (Article 133).
What governing law applies to mining M&A transactions in Kazakhstan?
Subsoil use licences and contracts are governed by Kazakhstani law. Share purchase agreements, shareholders' agreements, and earn-in arrangements at the investor level may be governed by Kazakhstani law, English law, or AIFC law. For international investors, AIFC law is increasingly used at the holding company level, providing English common law contract enforcement without requiring an offshore structure.
What due diligence is required on a Kazakhstan subsoil use acquisition?
Legal due diligence covers: title to the subsoil use licence or contract and transfer history; compliance with work programme or licence and local content obligations; environmental liabilities and closure obligations; permit and pre-emption right implications of the proposed structure; corporate structure and encumbrances on the subsoil user entity; and outstanding tax and regulatory liabilities. Bond Stone delivers risk-prioritised due diligence reports drawing on primary registry sources.
Related Guides
Regulatory Licensing
Energy & Subsoil Use Licensing in Kazakhstan
Obtaining subsoil use rights from the competent authority — licensing procedure, work programme obligations, and local content requirements
Corporate M&A
JV structuring, shareholder agreement drafting, deadlock mechanisms, and exit provisions for Kazakhstan-incorporated entities
Cross-Border M&A
Cross-Border M&A & AIFC Structuring in Kazakhstan
AIFC holding structures, acquisition SPVs, and cross-border deal mechanics for foreign acquirers entering Kazakhstan mining assets
Dispute Resolution
International Arbitration in Kazakhstan
IAC, ICC, LCIA — arbitration of mining and subsoil disputes, New York Convention enforcement
Subsoil use advisory, M&A due diligence, JV structuring, and earn-in agreements
Bond Stone Law Firm · Almaty · Astana · Tashkent