Until around 20 years ago the city, which is now home to an estimated 700,000 people, was no more than a few houses on a grassy plain, a distant Soviet outpost.
Tselinograd as it was once known, which translates as Virgin Lands City, was renamed Astana, or capital, in 1997, affirming its new status in the new Kazakhstan. The city has since gone through a transformation akin to Dubai or Abu Dhabi. While not as extreme in its architectural statements as the UAE's new cities, it retains a similar feeling; it is a new metropolis built on the wealth of the region's oil reserves that is keen to make a statement about the country's status and future direction.
Inevitably such an expression of material wealth and ambition has not gone unnoticed by western businesses. There is clearly money to be made, particularly as Kazakhstan strives to industrialise and add diversity to its commodity export driven economy.
President Nursultan Nazarbayev, a former leader of the Soviet Party of Kazakhstan, and the independent country's first, and only president, is credited as the driving force behind this capitalist revolution and its apparent upward trajectory.
Kazakhstan is consequently considered a lot more stable than its Commonwealth of Independent States (CIS) neighbours Tajikistan, Uzbekistan and Kyrgyzstan, and for many is increasingly worth the considerable effort to invest.
At the heart of its economic strategy is localisation of industry, and this was emphasised during President Nazarbayev's speech at the inauguration of a new locomotive plant in Astana on December 4. "Kazakhstan creates unique conditions for investors, through offering tax incentives and the provision of land," he said. "We are encouraging opportunities for large investments because we want to develop our own industry."
Alstom is a 25% partner in the €50m plant built in just a year, along with its strategic partner Transmashholding (TMH) which holds an equal size stake, and Kazakhstan Railways (KTZ) which holds a 50% share. The facility has capacity to produce 100 sections, or 50 locomotives per year, initially fulfilling the requirements of a $US 1.3bn contract the JV secured from KTZ for 295 locomotives in 2010.
While Alstom is embracing Kazakhstan, some western businesses across various sectors have reportedly decided not to follow through with their initial enquiries to invest. Rail though appears to be different. Alstom, Talgo, which is building passenger coaches, and Kurastyru Zauyty Locomotive (LKZ) which is producing diesel-electric Evolution Series locomotives under license from GE, have established a railway manufacturing business park on the outskirts of Astana.
LKZ is 50% held by Transmashholding and has capacity to produce 150 units per year. Since 2009 it has manufactured locomotives and shunters for the domestic market as well as for export to Mongolia, Tajikistan and Kyrgyzstan. Tuplar Talgo, a consortium between KTZ and the Spanish rolling stock manufacturer, secured an initial order to build 420 new coaches for KTZ in 2010 as well as a maintenance contract worth nearly €1bn in 2010, while in December a joint venture of GE Transportation, the Remlokomotiv subsidiary of KTZ and Transmashdiesel announced a plan to build a new €90m diesel engine plant in Astana.
Nazarbayev believes that railways are "at the centre of a thriving economy," which is reflected in the government's commitment to revitalising its network through a $US 30bn investment up to 2020. This includes building the new 293km line from Korgas to Zhetgen which is budgeted at $US 1.02bn and will aid transit from China to Europe, along with network-wide infrastructure improvements including signalling and telecommunications upgrades.
However, a great proportion of this investment is on new rolling stock. KTZ purchased 15,000 wagons last year alone and it is estimated that 87% of its 1500 strong locomotive fleet are at life expiry. Elsewhere in the CIS, substantial demand also exists for new modern rolling stock to replace life-expired former Soviet equipment, although not on the same scale.
It is this potential across the 1520mm-gauge central Asian region that is driving Alstom's efforts to make a big impact in this market.
In October the company completed the first freight locomotive for KTZ at its Belfort plant in France, which was on display during the inauguration. A further nine freight and 20 passenger locomotives are being built at Belfort, while another 15 freight locomotives will be built as kits to be assembled in Astana. Alstom estimates this will take it up to 2014-15 at which point full manufacturing will shift to the 27,500m2 facility, thus fulfilling the localisation commitment.
The company hopes to complete its initial order for 295 locomotives, of which 200 are freight and 95 passenger, by 2020 and is optimistic that additional orders will follow.
Mr Patrick Kron, Alstom's CEO, confirmed to IRJ that the company believes that a 50-70% localisation target is economically sustainable for its operations in Kazakhstan. He said the company aims to reach 30% localisation by 2016 and 72% by 2020.
However, unlike the Kazakhstan government, localisation to Kron does not encompass only Kazakhstan, but the entire CIS region. Alstom's existing plants in Russia are included as potential suppliers to this market, and it's at its new Novosibirsk facility where Railcomp, a 50:50 joint venture with TMH, will produce traction equipment for the locomotives. Alstom will also produce bogies in the CIS.
Of course Alstom is reliant on third party suppliers - up to 60% of the locomotives' content according to Kron - and it is working to encourage partners to make similar investments in localised manufacturing facilities to establish a supply chain in Kazakhstan. Already Knorr-Bremse has committed to supplying braking equipment, while ABB is also set to produce transformers for the locomotives in the region.
Attracting further local production investments from its traditional suppliers, despite obvious demand, however, remains a challenge.
French ambassador to Kazakhstan Mr Jean-Charles Berthonnet says that a great deal of effort has been placed on presenting the country as a place for investment to numerous French businesses. Take-up though remains slow.
Nevertheless Kron remains steadfast in his encouragement. "If they choose to come here we will aim to make them as visible as possible," he says. "As we are trying to make ourselves as visible as we can."
A further localisation challenge is building the workforce required to manufacture and engineer what is a complicated piece of equipment. Berthonnet says that the standard of the Kazakh education system is not producing the level of engineers required, and this is likely to remain a significant difficulty in the years to come.
Yet the willingness to overcome these obstacles is a sign of Alstom's long-term strategy for the region. The rewards will not come easily or overnight, but by working with its joint venture partners they remain attainable and economically attractive.
For example Alstom appears poised to secure the contract to build Astana's proposed light rail network. Discussions are continuing with the local administration, with three design options under consideration for three lines, the first of which will link the city directly with the airport. Rolling stock would be supplied from Alstom's St Petersburg plant.
The aim is to start work in 2014 and complete at least the first line by 2017, in time for the World Expo, which will showcase Astana and Kazakhstan's progress to the world.
Indeed progress in the rail sector is unlikely to cease anytime soon, particularly with the expected growth in railfreight traffic from China to Europe via Kazakhstan following the aforementioned improvements to infrastructure. And with Alstom as well as Talgo and GE, and their respective supply chains likely to be well established by this point, these are opportunities they will be primed to embrace.
