Analysis of the draft law introducing amendments and additions to the Code of the Republic of Kazakhstan “On Subsoil and Subsoil Use” and the conclusion of the Government of the Republic of Kazakhstan on digitalization in the subsoil use sector.
Digital technologies are no longer merely an auxiliary tool in subsoil use. They have become a factor determining production costs, industrial safety and the competitiveness of the mineral resources sector.
The state is responding through the consistent adaptation of legislation: subsoil users’ obligations in the field of science have been supplemented by obligations relating to digitalization, while the adoption of the Digital Code of the Republic of Kazakhstan has established a unified conceptual framework for digital regulation.
A draft Law of the Republic of Kazakhstan “On Amendments and Additions to the Code of the Republic of Kazakhstan ‘On Subsoil and Subsoil Use’ on Digitalization in the Subsoil Use Sector” has now been initiated and is under consideration.
The Government of the Republic of Kazakhstan has submitted its opinion on the draft: the bill is supported conceptually, some amendments are fully supported, others are supported subject to reservations, while certain provisions have been proposed in alternative wording.
At first glance, the bill appears to be a set of legal and technical clarifications. In most of the twenty-three items in the comparative table, the words “research, scientific and technical, and experimental development works” (hereinafter, “R&D”) are supplemented by the words “and/or digitalization projects.”
In substance, however, the bill involves two separate reforms, each directly affecting the financial obligations of subsoil users: extending the obligation to finance digitalization to the mining and metallurgical sector (hereinafter, the “MMC”) and moving performance of this obligation to a new mechanism under which funds are transferred not to subsoil users’ own projects but to the Autonomous Cluster Fund “Astana Hub” (hereinafter, the “Fund”).
1. What prompted the bill?
In the justification for the key amendment, the drafters expressly refer to a meeting chaired by the Deputy Prime Minister — Minister of Artificial Intelligence and Digital Development of the Republic of Kazakhstan held on December 29, 2025.
Following that meeting, the Ministry of Industry and Construction was instructed to initiate amendments to subparagraph 2) of paragraph 1 of Article 212 of the Code of the Republic of Kazakhstan “On Subsoil and Subsoil Use” (hereinafter, the “Subsoil Code”) concerning the financing of digitalization projects.
The current version of the Subsoil Code regulates digitalization inconsistently.
Articles 129 and 178 of the Subsoil Code, which govern the obligations of subsoil users engaged in hydrocarbon and uranium production, already expressly refer to the financing of digitalization projects, which is also reflected in the titles of those articles.
Article 212 of the Subsoil Code, meanwhile, is titled “Obligations of a Subsoil User in the Field of Training and Science in the Production of Solid Minerals” and does not cover digitalization.
This asymmetry meant that the mining and metallurgical sector formally could not direct the statutory one percent toward digital solutions.
The Digital Code of the Republic of Kazakhstan dated January 9, 2026, No. 255-VIII, effective from July 11, 2026, introduced the concepts of “digitalization,” “digital technologies,” and the “authorized body in the field of digitalization.”
The Subsoil Code, however, continues to use the terms “informatization,” “informatization object,” and “authorized body in the field of informatization.”
The Government proposes replacing these concepts throughout the entire text of the Code.
2. The MMC assumes a digitalization obligation
The central amendment concerns subparagraph 2) of paragraph 1 of Article 212 of the Subsoil Code.
Under the current wording, beginning from the second year of a mining licence, a subsoil user engaged in the production of solid minerals is required to finance R&D annually in an amount equal to one percent of the production expenses incurred by the subsoil user in the previous year, in accordance with a procedure determined by the competent authority jointly with the authorized body in the field of science.
The proposed wording introduces three changes simultaneously:
- first, alongside R&D, a separate object of financing is introduced: digitalization projects in the field of solid minerals;
- second, the procedure for financing digital projects will be determined by the authorized body in the field of solid minerals jointly with the authorized body in the field of digitalization, meaning two authorities instead of one, while the authority to determine the procedure shifts from the competent authority to the sector-specific authorized body;
- third, the wording of the calculation base changes: instead of “one percent of production expenses incurred by the subsoil user in the previous year,” the proposal refers to “one percent of production costs incurred by the subsoil user during the period of solid mineral production based on the results of the previous year.”
This amendment is presented as aligning the wording with Articles 129 and 178 of the Code. However, as can be seen, it is not merely editorial.
Linking the calculation to costs incurred “during the production period” raises questions about costs incurred outside that period and the accuracy of calculations for subsoil users whose exploration and production periods overlap or are not clearly separated.
For major subsoil operators, the financial implications may be substantial. Accordingly, there is no clear and unequivocal understanding until subordinate regulations are adopted.
The amendment does not exist in isolation.
It is supported by amendments to Article 208 of the Subsoil Code, under which the amount of the obligation to finance digitalization projects must be expressly stated in the solid mineral production licence.
Amendments to Articles 244 and 246 of the Code also extend the regime governing agreements on the processing of solid minerals to digitalization.
The Government fully supported all three amendments.
3. Contributions to the Fund
The most significant change is repeated in Articles 129, 178 and 212 of the Code: the obligation to finance digitalization projects will be fulfilled by transferring funds to the Fund.
The Fund will be entitled to use no more than three percent of such financing to cover expenses associated with the performance of its functions.
Under the proposed structure, the obligation takes on the characteristics of a targeted contribution in favour of a specific development institution.
The Government supported this mechanism but identified a significant gap: the Fund currently has no statutory basis to form its property from such contributions.
To address this issue, it has been proposed to supplement paragraph 1 of Article 10 of the Law of the Republic of Kazakhstan “On the Astana Hub Innovation Cluster” with a new subparagraph 4-3), expressly identifying part of the contributions made by subsoil users for digitalization projects as a source of formation of the Fund’s property.
Paragraph 1-1 of Article 1 of the Subsoil Code provides that amendments and additions to the Code must be introduced by a law that does not provide for amendments to other legislative acts, except for draft laws prepared under the legislative initiative of the President of the Republic of Kazakhstan.
The bill under consideration was initiated by members of Parliament.
Accordingly, the amendment to the Law “On the Astana Hub Innovation Cluster” cannot be adopted through the same law and requires a separate legislative solution.
The practical risk is a lack of synchronization: the contribution mechanism under the Code may enter into force before the Fund obtains a lawful basis for accepting the relevant funds.
4. The training percentage receives a new designated purpose
In parallel, the bill expands the permitted use of another obligation related to the training of Kazakhstan personnel under subparagraph 1) of paragraph 1 of Articles 129, 178 and 212 of the Subsoil Code.
The parliamentary version provided for the possibility of financing the training of citizens who are not employees of the subsoil user, including minors, under the Fund’s projects in the field of information and communication technologies.
It also established a closed list of seven socially vulnerable categories: persons with disabilities, children from families with parents with disabilities, families raising children with disabilities, persons suffering from severe forms of chronic diseases, orphans, large families and single-parent families.
The Government supported this amendment only in part and proposed removing the list of categories, leaving only the possibility of financing training for citizens of the Republic of Kazakhstan who are not employees of the subsoil user, including minors, under the Fund’s projects in the field of digital technologies.
The reasoning is based on the requirements of the Law “On Legal Acts”: the concept of “single-parent families” is not defined in legislation, while financing for socially vulnerable categories of the population is already provided for under existing joint orders of the authorized bodies.
5. Application to previously concluded contracts
In our view, the most sensitive set of amendments concerns paragraph 14 of Article 277 of the Subsoil Code.
This provision determines which provisions of the Law of the Republic of Kazakhstan dated June 24, 2010 “On Subsoil and Subsoil Use” continue to apply to contracts concluded before the Subsoil Code entered into force.
The bill proposes extending both the new procedure for financing the training of Kazakhstan personnel and the new mechanism for financing digitalization projects to such contracts.
At the same time, the drafters sought to avoid increasing the financial burden: the amendments expressly provide that the calculation base remains unchanged.
The Government’s version further clarifies that, for subsoil use contracts involving solid minerals, the relevant provisions apply solely to the financing procedure, without changing the basis for calculating the obligations.
In the justification for the relevant item in the comparative table, the drafters refer to a “0.5 to 0.5” allocation under the new mechanism to be applied to previously concluded contracts.
However, no such proportion appears in either the parliamentary or the Government version of the amendments.
The Government wording merely provides that digitalization projects will also be financed from the amount allocated for R&D.
This leads to the following conclusion: digitalization will be financed within the existing one percent rather than in addition to it.
However, the specific allocation between R&D and digitalization is not established by law and will be determined by subordinate regulations.
We believe that the planned amendments should have a positive effect, as they are intended to encourage the financing of digital projects in the sector, which in recent years has become one of the most important strategic priorities for both the state and investors.
However, a number of issues remain regarding nuances that may prove more important than the overall concept.
Among other things, the bill does not establish the procedure for using the relevant funds transferred to the Fund.
We believe that subordinate regulations and the Fund’s rules will enable the financing of subsoil users’ projects aimed at digitalizing their operations and deposits.
This material has been prepared on the basis of the comparative table to the draft Law, the conclusion of the Government of the Republic of Kazakhstan, and the current version of the Code of the Republic of Kazakhstan “On Subsoil and Subsoil Use.”
The material is for informational purposes only, does not constitute legal advice and may not serve as a basis for decision-making without an analysis of the specific circumstances.
