Young nation Kyrgyzstan fights over gold mine

In an impoverished young nation with a habit of overthrowing its rulers, the future now balances on a mountain of gold at the top of the world, where the air is so thin collapsing visitors may be rushed to a pressure chamber for oxygen.

After two revolutions in eight years, nationalists in Kyrgyzstan are threatening to return to the streets to topple another government unless it expropriates the Kumtor goldmine, a treasure they say was sold off too cheaply to foreigners.

Parliament in the remote ex-Soviet Central Asian state has set a deadline of June 1 for the government to renegotiate – or repudiate – a deal struck in 2009 with Canadian firm Centerra Gold to operate the mine.

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A state commission said the Canadian firm has been paying too little to run the mine, and accused it of inflicting environmental damage leading to $457 million in fines.

Three lawmakers were convicted last week of trying to seize power in the country by force after leading demonstrations late last year demanding the mine be renationalised.

Prime Minister Zhantoro Satybaldiyev, who took his job last September as a technocrat pledging to alleviate poverty in the country of 5.5 million, says compromise is vital and banishing Centerra would dash hopes of winning more foreign investment.

“Our investment climate will directly depend on how successfully we resolve the Kumtor issue,” the 57-year-old told Reuters in an interview.

GOLDEN CRUCIBLE

A landlocked country half way between Moscow and Beijing, Kyrgyzstan holds its national treasure at the mine 4,000 metres (12,000 feet) up in the Tien Shan mountains, near one of the world’s remotest borders, the old Soviet frontier with China.

Trucks the size of three-storey houses chug in a gigantic open pit to deliver rocks to a gold-extracting mill, which runs 365 days a year.

Inside a guarded room, two workers move slowly in silvery heat proof overalls, pouring bright orange molten gold from a crucible into moulds. Minutes later, four shiny bars worth $2.6 million are stamped and sealed in vaults.

Under the deal reached with ousted President Kurmanbek Bakiyev before he was toppled in a 2010 revolution, the mine’s operating company pays 14 percent of its gross revenue to the Kyrgyz state.

The state commission that investigated the deal concluded that the royalty is far too low, leading to parliament’s call for the deal to be revised or repudiated.

The dispute has reached the streets. Last October, three nationalist lawmakers led a crowd of supporters trying to storm the government headquarters, demanding Kumtor’s nationalisation. The trio, two of whom hail from Kyrgyzstan‘s poor, volatile and ethnically mixed south, were jailed last week for up to 18 months.

“We only voiced the will of the people to return Kumtor to our nation,” their leader, Kamchibek Tashiyev, parliamentary head of the nationalist Ata Zhurt party, said before he was sentenced.

Supporters, who rallied in the southern city of Jalalabad last month, have demanded they be freed by April 7 – third anniversary of Bakiyev’s fall – or they will launch nationwide protests.

NO SWITZERLAND

Kyrgyz leaders have long seen Kumtor as the country’s ticket to stability and prosperity.

In 1995, independent Kyrgyzstan‘s first president, mathematician Askar Akayev, visited the mine and declared: “We are transferring gold from the mountains to the banks, and this will help us become the Switzerland of Central Asia.”

Akayev was toppled in 2005, and his hopes of making his country into a new Switzerland have long since become a cruel joke. With its per capita GDP of $1,100, Kyrgyzstan is 12 times poorer than its former Soviet neighbour Kazakhstan, which has oil, gas, metals and grain-producing farms.

Kumtor, which means Sand Peak in the Turkic national tongue, accounted for 12 percent of Kyrgyzstan‘s gross domestic product in 2011, and more than half of its total exports.

Source: http://www.mineweb.com/mineweb/content/en/mineweb-political-economy?oid=184600&sn=Detail


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