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. Last Updated: 07/27/2016

Kazakh Decree Allows Direct Exports of Precious Bullion

A new decree in Kazakhstan allows for the possibility of direct exports of precious metals, enhancing the republic's attractiveness to foreign investors and the banks that lend to them, a legal analyst said.


The decree signed by President Nursultan Nazarbayev allows the exports only after foreign investors sign a "contract with an authorized body" permitting them to refine and produce bullion from precious metals mined in Kazakhstan, Interfax said.


Under the former law, all sales of precious metals had to be made to the National Bank, according to Almaty-based James Varanese, managing partner for LeBoeuf, Lamb, Greene & MacRae.


"On paper, that was fine because the investor would be paid in dollars at the world market price. But most companies that export need bank financing and, to lenders, cash that has to be filtered through a bank is a risk. What if the bank doesn't have the hard currency?"


The concession allowing foreign investors to export is the only exception to the decree's general rules for selling bullion produced from precious metals mined before "primary trading," Interfax said.


The new decree is likely to encourage Western investment because more certain loan repayment will make banks more likely to lend money to investors.


"It's important because investors now have the certainty that they will receive dollars for their exports, and that is better certainty for lenders," Varanese said.