Practically all significant projects in the mining industry are polymetallic. In polymetallic projects, copper and gold often serve as anchor metals and determine project economics, form the financing base, and set deposit valuation parameters.
Porphyry copper systems, typical of Central Asia, Latin America, and the Pacific Ring, contain by-product components: zinc (Zn), lead (Pb), silver (Ag), tungsten (W), and barite (BaSO₄). Each of these contributes to the project’s cash flow, but simultaneously is subject to its own set of regulatory, market, and ESG requirements. The investor operates not with ‘one metal,’ but with a resource system – and it is precisely the structure of this system that determines the return profile and risk profile.
For investors considering Eurasia, Kazakhstan is forming as a compromise jurisdiction with high resource potential but a complex administrative environment. Understanding regulatory architecture becomes a necessary condition for making investment decisions.
State Regulation: The Basic Model Persists, but It Is Insufficient
The right to mining is based on the principle of state sovereignty over natural resources. In practically all jurisdictions – Canada, Australia, Chile, Peru, Kazakhstan-one of the following models is applied: licensing, concessions, or production-sharing agreements. The models differ in the degree of state participation, but the logic is uniform: the state grants temporary and conditional access to the resource while retaining control over key parameters.
It is fundamentally important: the right to subsoil use is not absolute. It can be terminated if conditions are violated, obligations are not fulfilled, or regulatory policy changes. An existing license does not protect against tightening environmental requirements, revision of fiscal conditions, or export restrictions. In polymetallic projects, various ore components may fall under different regulatory regimes.
The presence of a license does not guarantee project feasibility. Feasibility is determined by a combination of factors, where formal rights to subsoil resources represent a necessary, but not sufficient condition.
ESG as a De Facto Market Access Regulator
In many countries, ESG standards are formally optional. In practice-without them, an asset does not obtain financing, banks deny credit, insurance companies exclude coverage, traders do not accept raw materials into supply chains. A project with an operating license but without ESG compliance finds itself cut off from the international market regardless of the quality of the resource base.
The framework is set by three sources: the UN Guiding Principles on Business and Human Rights, the OECD Due Diligence Guidance, and EU Regulation 2017/821 on conflict minerals, which establishes mandatory traceability requirements for tin, tantalum, tungsten, and gold (the 3TG group), but does not extend to copper, for example.
The difference in regimes is critical. Gold is subject to regulatory requirements for traceability. Copper and by-product metals-zinc, lead, nickel are regulated primarily through industry standards and investor ESG policies. In a polymetallic project, this leads to a specific consequence: different components of the product are simultaneously subject to different requirements, and compliance costs must be built into the financial model from day one.
Industry Standards: Formation of a ‘Second Law’
An additional level of regulation is formed by industry initiatives that de facto determine access to financing. The Responsible Gold Mining Principles (RGMP, 2019) set the standard for responsible gold mining. Copper Mark, launched the same year, certifies the production of copper, zinc, nickel, and molybdenum making it relevant for polymetallic projects. The Global Industry Standard on Tailings Management (GISTM), created by UNEP, ICMM, and PRI following the Brumadinho disaster (2019), has become a key element of comprehensive due diligence: independent audits, monitoring, and response plans are essentially mandatory for projects with international financing.
A project that does not comply with RGMP, Copper Mark, or GISTM will not pass due diligence with most institutional investors and lenders. These standards directly affect access to debt financing and cost of capital-regardless of the quality of the resource base.
Supply Chains: Control of Origin as a Key Risk
Control of supply chains is built on different mechanisms for precious and other non-ferrous metals. For gold, the driver is EU Regulation 2017/821, which requires confirming that raw materials are not linked to conflict financing or illegal mining. For copper and other non-precious metals, regulatory requirements regarding origin are less developed; however, market pressure compensates for this gap: investor ESG policies, corporate reporting requirements, and the Copper Mark form a control system comparable in rigor to regulatory requirements.
At the transaction level, this leads to specific consequences: the company bears responsibility not only for its own activities but also for the entire chain of counterparties. Non-compliance with standards on any stage from mining to processing means the risk of supply blockade and loss of market access. Supplier and processor due diligence procedures must be embedded in the operating model from the start.
Jurisdiction Comparison: The Model Is Similar, Risks Are Different
The basic legal model in leading jurisdictions is similar: state control, licensing, environmental assessment (EIA/EIS), public consultation, and land rehabilitation. However, the nature of risks differs fundamentally. Chile faces increasing water stress pressure that could block major projects. Peru is characterized by high levels of social conflict surrounding mining. In Canada and Australia, the key factor is indigenous rights, requiring lengthy negotiations. In the United States, investors face the overlay of federal regulation on state legislation.
The model is similar; the risks are different. Jurisdiction assessment is not reduced to analyzing legislation: it requires analysis of enforcement practice, social environment, and administrative culture. Other Central Asian jurisdictions are also of interest. Further details are available in our materials: “The Mining Sector of Uzbekistan” and “Kyrgyzstan: Investment Opportunities”.
Kazakhstan: Balancing Opportunities and Regulatory Control
Regulatory Model and the State’s Role
Regulation of subsoil use in Kazakhstan is based on the Code “On Subsoil and Subsoil Use” of December 27, 2017 No. 125-VI. Unlike classical licensing regimes, the Kazakhstani model retains contractual logic for a number of projects, which implies a more active role for the state: the need for coordination of key decisions with the regulator, limited freedom in the transfer of subsoil use rights, and significant influence of administrative practice on asset realization. The state positions itself not as a registrar of rights but as an active participant directly influencing project economics. The negotiation component here is substantially more significant than in jurisdictions with a ‘pure’ licensing model.
Investor Limitations: Transactions and Control
The key control instrument is the state’s right of first refusal (Article 43 of the Subsoil Code). It applies not only to the transfer of subsoil use rights but also to transactions involving shares in subsoil-using companies. Any change of control over a mining asset requires coordination with state bodies, affecting investor entry structuring, deal closure timelines, and exit conditions. Even a deal agreed between the parties can be blocked. This factor must be built into the financial model.
Fiscal Model
The fiscal system is built around the tax on mineral extraction (MET-Section 15 of the Tax Code) and corporate income tax (CIT-20% rate). MET is tied to world prices: rates vary depending on the type of raw material and amount to approximately 5.7% for copper and from 7.5% for gold (with progressive increases as exchange prices rise). The actual tax burden is determined by the combination of MET, CIT, royalties, and mandatory payments under the subsoil use contract, making it a subject of individual analysis for each asset.
Practice: The Main Risk Is Not the Law, but Administration
When assessing Kazakhstan, formal legal analysis provides only part of the picture. Key risks relate to regulator behavior: the Ministry of Industry and Construction and the Committee on Geology carry out transaction coordination, obligation monitoring, and contract supervision. Particular attention deserves the transition from an exploration license to a mining license, including coordination of technical and economic substantiation and receipt of environmental impact assessment – the longest and least predictable stage in the project life cycle. Kazakhstan may also apply export duties and temporary restrictions on raw material export as part of domestic processing development policy.
Kazakhstan is not a ‘simple’ jurisdiction. The investment model requires thorough elaboration of regulatory and administrative risks. Success is determined not only by the resource base but also by the investor’s ability to build working relations with the regulator.
Practical Action Plan
When evaluating an asset, it is necessary to verify several interconnected blocks: license conditions and grounds for termination, the tax model including MET, export restrictions, infrastructure accessibility (including toll agreement conditions for projects with limited capital expenditure (CAPEX)), ESG requirement compliance, and the presence of resource reporting according to international reserve classification standards (JORC, NI 43-101, KazRC).
The financial model must include costs for ESG compliance, counterparty due diligence, regulator engagement, and scenarios for regulatory changes. Separate legal work is necessary when entering jurisdictions with an active state role (including Kazakhstan), with cross-border structure, and when attracting international financing.
The mining of non-ferrous and precious metals is transforming from a resource business into a complex investment-legal project. An investor working with a polymetallic asset simultaneously faces multiple regulatory regimes: state control over subsoil resources, ESG requirements of lenders, industry certification standards, and supply chain traceability requirements.
The key factor becomes not access to the resource, but the ability to manage the project’s legal, regulatory, and ESG risks. This ability determines whether an asset will obtain financing, pass lender due diligence, and be successful. Regulatory and ESG analysis is not an appendix to a geological report but a central element of the investment decision.
It is at this level that the real rules of the game are being formed today.