Kazakhstan's Saryarka SEZ plants face collapse over soaring electricity costs
Karaganda Plants Forced to Halt Production Due to Soaring Energy Tariffs
The Saryarka Special Economic Zone has real potential to become Kazakhstan's answer to Silicon Valley, but turning those plans into reality has so far proven impossible. The SEZ's industrial site is home to three plants specializing in high-grade ferrosilicon and technical silicon—yet each has faced severe financial strain caused by exorbitant electricity rates.
It was recently reported that YDD Corporation's ferroalloy plant, launched in 2019, has shut down its production line. With an annual capacity of 180,000 tons, the facility once employed over 500 workers. Now, only 55 remain to maintain the idle equipment, while the rest have either been laid off with severance pay, placed on leave with 50% of their salary, or transferred to a similar plant in Ekibastuz.
Officially, the Karaganda Ferroalloy Plant has also suspended operations due to economic difficulties. Before announcing the shutdown, only one of its four ore-smelting furnaces was still running; the other three had been placed in "cold reserve."
Ferrosilicon production is notoriously energy-intensive, with electricity costs accounting for nearly 70% of the final product's cost. Rising tariffs have made Karaganda-made ferroalloys uncompetitive, pushing manufacturers to the brink.
The same issue has plagued another major metallurgical enterprise, Qaraganda Power Silicon—a newly built plant in the Saryarka SEZ, constructed at a cost of 63 billion tenge. The investor initially launched one smelting furnace, planning to bring the remaining three online by the end of 2025. The plant was poised to reach full capacity, but those plans have now stalled.
"All our furnaces are ready for operation," Dmitry Kravchenko, deputy director of production, told Kazpravda. "We're keeping three offline, while one is undergoing scheduled maintenance. The high cost of electricity is driving our losses. As you know, this is an energy-hungry industry. We can only fire up all four furnaces once the tariff issue is resolved."
Finally, the third facility crippled by energy costs—Tau-Ken Temir's silicon plant—has been idle for nearly five years. Launched in 2010, it ground to a halt in late 2019 after a change in investors. With electricity prices soaring, producing technical silicon simply became unprofitable.
The situation at the plant was further worsened by the global slump in silicon prices. As a result, both submerged-arc furnaces were shut down, and production was mothballed.
It is worth noting that the silicon plant was revived last year. While the facility is now operational, the issue of electricity tariffs remains pressing.
But is power really that expensive for ferroalloy plants in the Saryarka Special Economic Zone (SEZ)? To answer this question, we compared the tariffs across Kazakhstan's various industrial sites.
The highest rates were found in the Aktobe SEZ (38.86 tenge per kWh excluding VAT), the Ostauistik SEZ (34.31 tenge per kWh excluding VAT), and the Pavlodar SEZ (32.58 tenge per kWh excluding VAT). Against this backdrop, Karaganda's rate of 27.93 tenge per kWh excluding VAT does not seem excessive. In fact, Saryarka ranks second-to-last in this ranking—only the Petropavl-based Qyzyljar SEZ offers cheaper electricity, at 24.57 tenge per kWh excluding VAT.
So, are Karaganda's silicon plants unjustified in complaining about tariffs? The answer is nuanced. The Saryarka SEZ prioritizes metallurgy and heavy machinery—both energy-intensive industries. The only other industrial hub in the country with a similar focus is the Pavlodar SEZ, where electricity costs more than in Karaganda.
Incidentally, late last year, a new ferroalloy plant with an annual capacity of 240,000 tons was launched in Pavlodar Region. It operates without issues—why? Because the facility is not part of the Pavlodar SEZ. Instead, it was built near Ekibastuz GRES-1 power station, from which it sources cheap electricity via a direct transmission line. This raises a question: Why not reduce tariffs for Karaganda's silicon plants, given their proximity to an energy source—the regional CHP-3 power station?
It should be noted that YDD Corporation's ferroalloy plant has already petitioned Kazakhstan's Ministry of Energy to introduce an investment tariff—a discounted rate—for its electricity. A similar measure could be applied to Qaraganda Power Silicon. In light of this, a Kazpravda correspondent has submitted a written inquiry to the Ministry of Energy.
Here is the translation of the text into English:
Here is the response we received: "Following a review of the application from Asia FerroAlloys LLP (Karaganda Ferroalloy Plant), a decision has been made to deny the company an investment tariff. Since the enterprise is already operational, its stated objectives have been largely achieved: jobs have been created, tax revenues are being generated, and production facilities have been commissioned."
The outcome for the second company is no more encouraging. "Qaragandy Power Silicon LLP, lacking a direct connection to a power station, does not meet the criteria for an investment tariff," Deputy Energy Minister of Kazakhstan Sungat Yesimov stated in response to our inquiry.
We also reached out to the Department of Entrepreneurship and Industry of the Karaganda Region for information. The government agency echoed the Energy Ministry's position and added that "amid the current electricity shortage and rising strain on the power grid, granting additional tariff incentives could lead to higher electricity costs for other market participants."
