This is part of a series, which looks at emerging global markets that are attracting the business and investment of enterprising Canadian companies.
When Canada established diplomatic relations with Kazakhstan in 1992, Saskatchewan uranium giant Cameco Corp. arrived the same year to pursue ties with the resource-rich former Soviet state.
A corporate pioneer in the Central Asian country, Cameco has invested more than $400-million (U.S.) at its Inkai mining operation, owned 60 per cent by the company and 40 per cent by state-owned KazAtomProm. In 2012, the joint venture partners deepened ties with an agreement that extends production to 2045 at the significant uranium deposit in southeast Kazakhstan.
Cameco's strategy combines patience, long-term investments and partnerships, ingredients seen by many as vital to success in this emerging market.
"Our experience in Kazakhstan has been a very good one," says Ken Seitz, senior vice-president and chief commercial officer at Cameco. "What we have found is we need to take a very long-term view, establish local partnerships and relationships and obviously conduct ourselves in the way we would in any other part of the world as it relates to corporate social responsibility, health and the environment."
Beyond direct investments, Cameco has spent $5-million over 22 years in Kazakhstan on corporate social responsibility initiatives. The Inkai mine accounts for 12.5 per cent of the company's global production of uranium.
Others with long experience in Kazakhstan echo the value of patience and partnerships.
"If you do it right, it works and if you don't do it right – by the seat of your pants – then you pay for it at the end of the day," says Paul Drager, a Calgary-based law partner at Norton Rose Fulbright. The former Canadian diplomat was appointed honorary consul in Western Canada for Kazakhstan in 2013.
His links there date to the early 1990s when his previous law firm (which later merged with Norton Rose Fulbright) opened an office in the southeastern Kazakh city of Almaty. That office now has two partners and a staff of 10 people.
Geographically larger than Western Europe, the country of 1.7-million people is politically dwarfed by its superpower neighbours, Russia and China. Led by President Nursultan Nazarbayev since gaining independence from the former Soviet Union in 1991, Kazakhstan scores ahead of its regional neighbours in a 2014 World Bank comparison of the ease of doing business in selected countries.
Still, operating in Kazakhstan is not without risk.
A recent country profile by Export Development Canada praises Kazakhstan's modernization efforts but warns that "the operating environment remains characterized by high levels of corruption" with volatile contractual conditions, heavy bureaucracy, a weak banking sector and increased government involvement in strategic sectors.
When difficulties arise, says Mr. Drager, they often relate to tax and regulatory changes.
He recommends Canadian companies mitigate risk by working with government agencies, such as Export Development Canada and the London-based European Bank for Reconstruction and Development, which assists countries in central Asia and Europe in making the transition to market economies.
As an export credit agency, EDC provides insurance to Canadian companies on shipments sent abroad. That assistance helped Bourgault Industries Ltd. to develop Kazakhstan as a top export market, says John Batiuk, director of export sales for the Saskatchewan seeding equipment manufacturer.
The agency "takes a lot of the uncertainty and risk out of the equation," he says. "We wouldn't be doing business without them there, that is for sure."
In the early 2000s, when Kazakhstan modernized its agriculture system by turning state-run farms into private operations, Kazakh farm implement dealers approached Bourgault as a potential supplier. In 2002, after a year's worth of research, Bourgault selected its local partners who assemble the equipment shipped from Saskatchewan.
Mr. Batiuk describes his company's experience in Kazakhstan as "a success story." In 2005, when a killing frost damaged wheat crops in Canada and the United States, sales to Kazakhstan enabled Bourgault to retain staff in a downturn.
Like others, the president of Winnipeg-based tractor manufacturer Buhler Industries (80 per cent owned by a Russian company since 2007) urges patience when doing business in Kazakhstan.
"That is the main thing you need," says Dmitry Lyubimov, citing the volume of government regulation. But he adds: "Once you build your relationships and keep your relationships in good faith, that works the best way."
Machinery for agriculture, oil, gas and mining dominate the list of current Canadian exports (stalled since the 2008 recession), with aerospace, industrial and civil infrastructure and health care seen as promising sectors.
As well, some Canadian postsecondary institutions are exporting their expertise. In 2013, the Southern Alberta Institute of Technology assisted Kazakhstan authorities in developing a training facility for the oil and gas sector.
With similar climates, resource wealth and proximity to powerful neighbours, Canada and Kazakhstan share an interest in expanding bilateral trade of almost $2.8-billion in 2013. In Central Asia, Kazakhstan is Canada's largest export destination in the region while Canada is Kazakhstan's top trade partner in North and South America, according to the federal government.
Canada and Kazakhstan, the world's top two uranium producers, recently implemented a nuclear co-operation agreement signed last November that permits Canadian firms to export and import controlled nuclear materials, equipment and technology under safeguards imposed by the International Atomic Energy Agency.
With the agreement in force, says Cameco's Mr. Seitz, "we can, through export permits, export some nuclear fuel processing technology to the Kazaks and seek to grow our relationship and presence and commerce in Kazakhstan."
The pact is the latest sign of "a much more mature relationship" between the two countries, Mr. Drager says. With competitors from China and Western Europe eyeing Kazakhstan, he adds "it makes sense for us to be involved there."
Six things to know
1. Visas are required but typically are processed easily, as Kazakhstan wants to attract foreign investors.
2. Foreign investment is generally permitted, but with restrictions in some sectors, including natural resources, media and telecommunication.
3. General partnerships and limited liability partners are the most common business structure.
4. Priority economic zones, created at the discretion of Kazakhstan's president, have been established in six areas of the country.
5. Canada and Kazakhstan have signed a bilateral agreement to avoid double taxation and recently implemented a nuclear co-operation agreement signed in 2013.
6. Kazakhstan ranks 50th of 189 economies on the World Bank 2014 index of "ease of doing business," a three-spot improvement from 2013.