Despite the global downturn in the metals industry, Kazakhstani giant Qarmet is demonstrating an impressive 15% increase in production. Managing Director Yerbol Ismailov explained how the company is dismantling long-standing corrupt schemes and transforming its business model, restoring the competitiveness of domestic steel on the world stage.
Today, the global steel industry is going through difficult times. In 2024, global steel production fell by 0.8%. Even the giants of metallurgy did not withstand the crisis: China reduced output by 1.7%, the USA by 2.4%, Japan by 3.4%, and Russia by a full 7%. A real collapse occurred in the United Kingdom (-29%), Argentina (-21.6%), and Pakistan (-23.2%). One by one, giant plants are shutting down: South Korea's Hyundai Steel, Spain's Acerinox, Chile's Huachipato, the USA's Liberty Steel, and Portugal's Siderurgia Nacional have all announced temporary mothballing of their production facilities.
Against this bleak backdrop, the Kazakhstani metallurgy industry genuinely looks like an island of stability. The country ranked 8th in the global rating for positive dynamics, with a growth rate of 6.5%. The driving force behind this success was the Qarmet metallurgical plant, which increased production to 3.5 million tonnes of steel – 15% more than the previous year.
As noted by the Managing Director of Qarmet JSC, Yerbol Ismailov, the main question is not whether markets can consume Kazakhstani metal, but whether we can compete. When he took over management of the enterprise in December 2023, the situation was dire: the cost per tonne of slab was reaching $440, while Russian competitors were producing similar products for $279.
A slab is not just a metal billet, but a key intermediate product in metallurgy – a rectangular steel block from which rolled sheet is later produced. Comparing the cost of a slab is like comparing engine efficiency: the lower the figure, the more efficient the production and the more competitive the final product.
Radical measures were swift: a special operational efficiency team managed to reduce the cost to $320 per tonne within a year. The plan includes the ambitious goal of reaching the $280 mark, which will allow Kazakhstani metal to compete on equal terms with its Russian and Chinese counterparts. The company's iron ore division underwent a deep reorganisation, which allowed for a 30% reduction in costs.
However, according to Ismailov, the main obstacle to efficiency was not technical problems, but long-standing corrupt schemes.
"Now we know how it was. No company could do a deal with the plant without an under-the-table cash fund. It was convenient – invoices were signed beforehand regardless of whether the service was performed or not. At a time when the steelmakers were not receiving sufficient funding, the back office was building elite housing," he said about the previous system of work.
Incidentally, last July, the editorial board of the FBRK published a detailed article about the identities of two suspects in the commission of large-scale embezzlement at Qarmet JSC. The individuals who came under investigation as part of a criminal case for fraud committed by an organised group were businessmen Miras Akhmetzhanov and Andrey Chizhevskiy.
In order to clean up its business processes, Qarmet JSC implemented a digital communication system with partners called QPartners and radically changed its procurement system, eliminating intermediary firms. A cluster of small and medium-sized businesses from Kazakhstan is forming around the enterprise, which is expected to stimulate localisation of production and further reduce costs.
Qarmet's strategic horizon is clearly defined: to achieve production of 5 million tonnes of steel annually by 2028. This will provide over 30% import substitution and significantly strengthen the country's metallurgical independence.
Despite the optimisation of costs, including the reorganisation of the hotel branch in Almaty and the directorate's residence in Temirtau, management denies having any financial difficulties. As proof, they cite an impressive figure: over the past year, the company attracted $3.5 billion in investment.
Ismailov does not hide the fact that the transformation is causing resistance.
"In some information sources, where materials are published via the commercial department, we observe the manipulation of public opinion through loud headlines and non-existent facts. One minute we have 'sold Qarmet abroad,' then 'the Chinese have taken over Qarmet,' then 'we bought a plane,' then 'we are closing the mines.' It gets to the point where allegedly original documents appear in social media, documents that never existed at all," the director noted.
However, the first results of the reforms are already noticeable: demand for Kazakhstani metal on the international market is growing. In addition to modernising its core production, the company has announced projects for the digitalisation of coal mines and an ambitious plan for processing the accumulated 750 million tonnes of industrial waste – an environmental challenge that has been put off for decades.
It is worth recalling that Qarmet JSC is Kazakhstan's largest steelmaking and mining company, owning the Karaganda Metallurgical Plant in Temirtau, Karaganda Region. The plant is the largest steelmaking enterprise in Kazakhstan and includes three divisions: steel, coal, and iron ore.
In August 2023, in the Karaganda region, a fire occurred on a conveyor belt at the 'Kazakhstanskaya' mine of the coal division of ArcelorMittal Temirtau JSC, where 227 people were present at the time. Five miners died.
In October of the same year, at the Kostenko mine in the Karaganda region, which also belonged to ArcelorMittal Temirtau JSC, a methane explosion claimed the lives of 46 people and injured 28 miners.
After the tragedy, Kassym-Jomart Tokayev ordered the termination of investment cooperation with the company. Subsequently, ArcelorMittal Temirtau officially transferred to the jurisdiction of Kazakhstan. The new investor of the enterprise became Andrey Lavrentyev, and the enterprise was renamed 'Qarmet'.
In February 2025, it became known that four officials were convicted for the deaths of miners at the 'Kazakhstanskaya' mine, receiving sentences of four years' imprisonment. The defendants included the acting deputy director of production for the production service, the head of the conveyor transport section, and two other individuals.