New essential oils extraction plant to be built in Kazakhstan

The fat and oil industry is one of the most promising and rapidly developing sectors of the agro-industrial complex due to the growing demand for vegetable oil, which is a necessity and a basic everyday product. Moreover, vegetable oil is an essential product used in various spheres: from cooking to the paint industry to the cosmetic industry. The production of oils, especially sunflower oil, is steadily growing due to investments from the state and businesses.

In 2021, a new state-of-the-art oil extraction plant of QAZAQ-ASTYQ GROUP LLP is set to be built in East Kazakhstan Region. It will produce sunflower oil and high-protein granulated meal for export to China, Uzbekistan, Tajikistan, Iran, India, Pakistan, Afghanistan, Turkey, and EU countries.

– The construction of the new plant began in March 2019. It will be able to process 1000 tons of sunflower seeds per day and 800 tons of rapeseed or flaxseed per day. Thanks to 5.8 billion tenge received from Agrarian Credit Corporation JSC (a subsidiary of Baiterek Holding), we managed to acquire the equipment for the plant in a short time. The plant’s main purpose – the production of unrefined vegetable oils and meal, was not chosen by chance. Almost 80% of factories of the fat and oil industry in Kazakhstan are specialized in vegetable oil production. Upon its launch, the plant will create jobs for more than 200 people, – said Altynbek Nuratuly, deputy director of QAZAQ-ASTYQ GROUP LLP.

The new plant will provide the full cycle of oil production, which will help it achieve sustainable competitive advantage. We are talking not only about state-of-the-art equipment that meets high-quality standards, raw materials, and sales of products but also about highly qualified personnel who will ensure the plant's work at a high level. To guarantee high quality of products, experienced specialists from Ukraine, the world leader in the production of vegetable oils, were invited to management positions.

Due to the high level of self-sufficiency and the strong positions of Kazakhstani companies in the domestic market, local manufacturers are increasing exports. According to the Customs Control Committee of the Ministry of Finance of Kazakhstan, the export of vegetable oils reached a record amount of 151.8 thousand tons at the end of 2018 (+ 43% compared to 2017). The main share of exports is sunflower oil, with 67.9 thousand tons delivered to foreign markets during the reporting period against 45 thousand tons a year earlier. China was the main buyer of sunflower oil having bought 28 thousand tons (41% of all export consignments). Tajikistan (19.5 thousand tons, or 29%) and Uzbekistan (18.6 thousand tons, or 27%) ranked the second and the third in the rating of top importers at the end of 2018.

– More than 90% of products of the future oil extraction plant are planned to be sold to foreign markets. At the moment, negotiations are already underway to conclude contracts for the supply of Kazakhstan-made vegetable oils to China, Uzbekistan, and the EU countries. We plan to launch a refining and deodorization manufactory, and a refined oil bottling manufactory. Their products also have great export potential and can be exported to countries such as Uzbekistan, Iran, India, Pakistan, and others, – said Altynbek Nuratyly.

To implement the export of vegetable oils to foreign markets, QAZAQ-ASTYQ GROUP LLP attracted financing from Development Bank of Kazakhstan JSC (a subsidiary of Baiterek Holding).

– For a long time, export-oriented Kazakhstani enterprises have been supported by the Development Bank of Kazakhstan. The received financing is quite satisfactory for us, and we hope for further cooperation with DBK, – said the company’s deputy director.

DBK has issued a loan for 4.4 billion tenge for three years. The export operation was funded under the Nurly Zhol State Infrastructure Development Program for 2015-2019 to support exports of manufacturing goods from Kazakhstan. The money provided by the Bank will be used to purchase raw materials (oilseeds), equipment, and services.

According to representatives of DBK, the total cost of the construction and launch of the oil extraction plant amounted to 12.5 billion tenge, including 4.4 billion tenge provided by DBK.

– Due to the rise in vegetable oil prices, the development of domestic oil production is very acute. Oil manufacturers are encouraging domestic farmers to increase the sown area, which will increase the amount of crop grown. It will meet the demand for vegetable oil in foreign and domestic markets. The project meets the key mission of the Bank as one of the main state institutions providing support for Kazakhstani non-resource exports and also promotes the export of Kazakhstani processed products, including on the territory of neighboring China. It will allow us to consolidate and strengthen our positions in the export markets, – said Vladimir Li, senior banker of DBK’s customer service department.

“KazakhExport” Export Insurance Company JSC (a subsidiary of Baiterek Holding) also issued a loan to QAZAQ-ASTYQ GROUP LLP for 4.4 billion tenge. It proves the successful cooperation of two financial institutions, which are both parts of the Baiterek Holding. DBK and KazakhExport have been working together since the beginning of 2015. As of today, they have supported 14 exporters with 77.7 billion tenge.

– Kazakhstan sells too many raw materials, including agricultural ones. Oil, metals, oilseeds, and cotton are exported to China; wheat is exported to Uzbekistan. We aim to fix this by supporting similar projects. Up-to-date large-scale essential oil production plants positively affect the economy by creating jobs. Also, these plants produce not only essential oils, but also meal and oilcake, which are used as feed in poultry farms, pig farms, and fish farms. I am glad that, despite the pandemic, entrepreneurs do not scale down investment projects and look to the future with optimism, – said Kuanysh Mukazhanov, Director of the Insurance Department of ESC KazakhExport JSC.