We have 15 years experience of building businesses and today work with more than 30 companies
across four continents from our headquarters in Singapore. Our key markets are oil and gas,
agriculture, real estate, construction materials and Vietnam.

Origins of Kusto

The history of Kusto Group is rooted in the experiences of a group of young, reforming entrepreneurs,
led by Yerkin Tatishev. Following the collapse of the Soviet Union, many previously successful industries
and facilities were rendered inoperable, due to years of under-investment, neglectful management
and a changed marketplace.

The hardest hit was single-resource towns and communities, whose prosperity was tied to an ecosystem
of inter-dependent mines, factories and manufacturing units. Nowhere was this truer than in Zhitigara,
in north-western Kazakhstan, an area whose proud history was built around the local chrysotile mining
and manufacturing enterprise, Kustonayasbest (later renamed Kostanai Minerals).

In 1997, Yerkin and Kusto Group’s future co-founders attempted to restore Kustonayasbest’s fortunes.
They found a town and an operation in desperate need, where:

  • -    The company was on the edge of destruction;
  • -    The company had an almost year-long debt on salaries and taxes;
  • -    There were constant strikes at the factory and in the town;
  • -    There was a high unemployment rate;
  • -    Pensions had not been paid in years;
  • -    The town’s infrastructure was crumbling;
  • -    Operating bills and payables were unpaid;
  • -    There was an absence of monetary operations. A barter system had been employed as the local
    economy flagged;
  • -    Electricity was irregular, making operations unsafe;
  • -    Equipment had not been updated in years.

In short, the town and its operations were on the brink of bankruptcy and in danger of becoming yet another
one of Kazakhstan’s growing number of post-Soviet era ghost towns. Something profound had to change.

While neither Kustonai nor Orenburg – then or today – are part
of the Kusto Group, the lessons learned in that time have not been forgotten

The team, led by Yerkin, set to work implementing management changes which were new at the time. They
took calculated risks, leading by example and eliminating top down hierarchies. They worked around-the-clock
to win the support of the local population and the dedicated workforce. They set out a clear vision for a focused, profit-based business.

Theft was stopped. Communication with the town and stakeholders increased. They reinvested heavily
in the mine – particularly on health and safety initiatives. They curtailed structural inefficiencies. They enhanced
yields of raw materials. They focused on quality during refining and enrichment. They prioritized products
that customers needed, and sought out new domestic and international markets.

The success of these young entrepreneurs in an unpredictable and transitional economy, beset with a range
of structural and social challenges, helped establish a set of core values that contributed to the identity
and success of the future Kusto Group. The experience became part of the Group’s DNA.

The values of team work, cultural sensitivity, elimination of management barriers, respect for difference,
intellectual rigor, team events, direct involvement, goal setting and transparency are today
the underpinnings of the projects carried out by Yerkin, the Group and Kusto’s employees.

Five years later, in 2002, the situation at Kostanai Minerals was unrecognisable. Revenue was coming
in and the company was growing. The management made capital expenditure and reinvestment a priority. Equipment was upgraded. The efficiency of the manufacturing process was sharpened. Safer worker conditions were created and enforced.

As the bottom line grew, so too did the commitment of the workers – and that of the management. It was at this point that Yerkin and his team enacted the first competitively bank-financed management buy-out in the sector,
by purchasing the Kostanai Minerals’ operations. This innovative and transparent process stood in stark contrast
to the sale of other assets in the process of privatizing former Soviet businesses and operations.

Yerkin and his team, however, were far from finished. Taking the lessons of Kostanai, they transferred their know-how to a neighbouring mine, Orenburg Minerals, on the Russian side of the border. By focusing on the same principles of transparent team-work, goal-setting, reinvestment and worker safety, Orenburg Minerals quickly saw its productivity and profitability grow.

While neither Kostanai nor Orenburg Minerals – then or today –
are part of the Kusto Group, the lessons learned in that time have not been
forgotten.

Kusto Group maintains strong links with the area to this day.
We are proud that the changes our founders helped deliver to those two
businesses have, in part, resulted in the regeneration of an entire region:

  • -    Since 1998, the volume of production has increased 2.5 times, whilst revenue has increased by a factor of seven.
  • -    Kostanai Minerals contributes more than 50% to the town’s budget.
  • -    In 1998, unemployment stood at 15.3%. In 2015, it had fallen to just 5.1%.
  • -    In 1998, 42.3% of the population were living below subsistence levels.
    In 2015 this had reduced to just 6.8%.
  • -    And tellingly, since 1998, life expectancy has risen from 64.9 years
    to 70.3 years in 2015.
  • -    The entire town’s social infrastructure has been restored and rebuilt.
  • -    The company has become an award-winning leader, recognized
    for the implementation of innovative technologies in the mining industry.

Kusto Group and its founders have a history and a pedigree of working
in complex and challenging environments. The Group has shown that
by being united in purpose, by having clearly defined goals and by having
the energy and expertise to execute them, it is possible to create
equitable, sustainable and successful enterprises for all stakeholders –
even in the most challenging environments.

Kusto Group is proud of its history of excellence and the values based
commitment to the communities where it works. This is the Kusto way.