The company through which part of the phosphorus business of the Kazakhmys Holding LTD group is structured has closed the year with a net loss of over 45 billion tenge for two years running. By the end of 2024, the accumulated loss of KAZ Chemicals LLP had reached 116.6 billion tenge, and its equity had become negative. Auditors have for two consecutive years flagged factors casting doubt on the company's ability to continue as a going concern. We examine what lies behind these figures.
WHAT THE FINANCIAL STATEMENTS SHOW
After the AFKR published material on the financial statements of Astana airport, readers contacted the editorial team asking us to look into the financial statements of KAZ Chemicals LLP, Kazphosphate LLP, GPK Kazphosphate LLP and Novodzhambul Phosphorus Plant LLP, as well as the nature and causes of their large debts.
Let us take each company in turn.
KAZ Chemicals LLP was registered in Almaty in 2018. Its shares are held by Kazakhmys Resources B.V. (80%), as well as Nurkhan Nurlanov and Nurzhan Nurlanov (each holding 10%). The ultimate controlling party of the Kazakhmys Holding LTD group is Kazakh citizen Vladimir Kim. KAZ Chemicals LLP is a holding company that owns a stake in its subsidiary Novodzhambul Phosphorus Plant LLP (NDFZ), which processes phosphorus ore, and holds subsurface use licences valid until 2046.
For 2024, the company's net loss amounted to more than 45 billion tenge, almost matching the 2023 result of 45.7 billion tenge. The accumulated loss grew to 116.63 billion tenge, equity turned negative (-116.62 billion tenge), and total liabilities (188.9 billion tenge) were almost three times the value of assets (72.3 billion tenge). Current liabilities at year-end stood at 59.2 billion tenge, while current assets were just 254 million tenge, including 4.96 million tenge in cash at bank. It is important to note that these are the financial statements of the management holding company itself, which conducts almost no operational activity. Its own revenue in 2024 was only 46.7 million tenge; the assets and revenue of the manufacturing plant are not included here.
Auditors Moore Kazakhstan included a paragraph on material uncertainty regarding going concern in both opinions, although the opinions themselves on the fairness of the financial statements contain no qualifications.
WHAT IS KNOWN ABOUT THE DEBT OBLIGATIONS
The main debt relates to a credit facility from Halyk Bank of Kazakhstan JSC, opened in 2021 for $445 million (later increased to $600 million) to purchase a 100% stake in Kazphosphate LLP. At the end of 2024, the outstanding balance stood at 113.5 billion tenge.
In 2022, Kazphosphate was reorganised through a spin-off, which is how NDFZ came into being. In August 2023, KAZ Chemicals sold its remaining stake in Kazphosphate to CAF Holding Ltd, and the payment was structured as a transfer to the buyer of debt owed to the bank amounting to $314 million. The transaction ultimately generated a loss of 34.9 billion tenge, becoming the main cause of the negative 2023 result. At the same time, the company has been actively borrowing from related parties: from Kazakhmys Corporation (over 38 billion tenge at rates of 0–16.7%) and from NDFZ itself (over 36 billion tenge).
WHAT THIS MEANS
For three consecutive years, the company has generated almost no operating income commensurate with the scale of its liabilities. Finance costs (mainly accrued interest on loans) amounted to 15.3 billion tenge in 2024, while the weakening of the tenge added a further 15.5 billion tenge in foreign exchange losses. In other words, almost two-thirds of the annual loss stems not from operations but from the cost of servicing debt and the currency risk of the dollar-denominated loan.
Separately, an impairment of the investment in NDFZ of 9.43 billion tenge was recognised. An independent valuer using the discounted cash flow method determined that the recoverable amount of the stake in the plant was below its carrying value, meaning expectations regarding the future cash flows of the group's main production asset have deteriorated.
The financial statements also record a breach of contractual discipline. As at 31 December 2024, the company "had not properly formalised the collateral for the loan and had made loan payments late". Formally, this gave the bank the right to demand early repayment, but the company received a waiver letter from the bank confirming no claims.
Finally, the key going concern assumption rests not on operating performance but on an informal assurance from the owners that financing will continue until the company reaches break-even.
In May 2025, after the reporting date, KAZ Chemicals, Halyk Bank, Kazakhmys Corporation and NDFZ entered into a subordination agreement: the bank loan is now repaid on a priority basis. This means that if the situation deteriorates, intra-group creditors (Kazakhmys Corporation and NDFZ) will rank behind the bank, taking on additional risk to preserve the relationship with the external creditor.
It should be noted that as at the time of publication, KAZ Chemicals' financial statements for 2025 are not available in the financial reporting depository (FRD) — despite companies subject to mandatory audit being required to publish their annual financial statements no later than 31 August of the year following the reporting year.
In summary, based on at least two sets of financial statements — for 2023 and 2024 — we have a company with negative equity of 116.6 billion tenge, liabilities of almost 189 billion tenge, and own assets of just 72.3 billion tenge. Moreover, KAZ Chemicals itself conducts virtually no operational activity: it functions primarily as an asset holder and borrower, and its financial stability largely depends on the willingness of the owners and related companies to continue providing funding.
In other words, behind the façade of a formally large industrial holding, a very different picture emerges from the financial statements: the debt burden exceeds the company's own financial base many times over, and the ability to continue operations is sustained not by current profits but by support from within the group and arrangements with creditors. It is precisely this structure that holds the key to understanding how KAZ Chemicals accumulated such significant debt and why its financial stability has now raised questions from auditors for the second year in a row.
To be continued...
