Uzbekistan launches program to attract investment into mining

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On April 21, 2021, the President signed Resolution No. PP-5083 on additional measures to actively attract investment into mining.

Under the Resolution, the government has established Uzbekgeologorazvedka JSC, by consolidating several enterprises1, to service exploration under the state programs for the development and expansion of the country’s mineral resources.

The main objectives of Uzbekgeologorazvedka are:

  • modernization of the geological sphere;
  • conducting systematic work aimed at reducing the cost of services;
  • increasing operational efficiency of operations;
  • ensuring competitiveness of works carried out in the industry;
  • ensuring the development of the mineral resource base.

In 2025, Uzbekgeologorazvedka will attract investors through public primary and secondary placement of shares with the assistance of international financial institutions and consulting organizations.

The Ministry of Finance and Goscomgeology have been instructed to:

  • create a project office in Uzbekgeologorazvedka JSC for:
    • implementation of transformation processes;
    • implementation of modern corporate governance systems and international standards;
    • coordination of financial and economic activities;
  • staff at least 30% of the supervisory board with qualified specialists in the industry with foreign experience;
  • create the position of deputy CEO – financial director (CFO).

New areas and mineral deposits identified as a result of geological exploration are investment sites into which the Goscomgeology will attract potential investors.

Starting from 2022, subsoil users shall annually, before February 1, submit information to Goscomgeology on the results of their exploration work and the increase of mineral reserves obtained in the previous year and the planned volume for the current year.

It is envisaged to include in a new draft law "On Subsoil":

  • A system for dividing subsoil areas into blocks (areas) based on international geological standards;
  • An annual fee for obtaining a permit to use a block, rather than a one-time subscription bonus. This fee takes into account the size of the block and the types of minerals available on the site, as well as the amount of the annual minimum cost of geological exploration;
  • Online issuance of permits for the right to use little-explored subsoil areas for geological exploration on the basis of the "first come first served" principle, based on applications from investors through the Single Portal for Interactive Public Services;
  • Issuance of permits for the right to use areas with a high degree of exploration and the potential for the discovery of deposits for geological exploration, as well as mining of minerals at discovered deposits based on the results of auctions held on the Single Electronic Trading Platform "E-AUKSION".

A procedure has been established according to which:

  • If Goscomgeology receives an investor's application for a permit for the right to use a subsoil area not put up for auction, this permit shall be put up for auction through E-AUKSION;
  • If the right to use a subsoil area is auctioned through E-AUKSION, and the auction is recognized as failed, and the same participant applies twice for the same subsoil area, such a participant is declared the winner based on the “sole bidder” principle as a result of the second auction.

 

1. JSC Kizilkumgeologiya, JSC Samarkandgeologiya, JSC Surkhonggeologiya, JSC Hisorgeologiya, JSC Toshkentgeologiya, SUE Central Laboratory and SUE Geoburtech.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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