Centerra and Kyrgyzstan Reach Agreement to Split

If implemented, the agreement would see the Canadian mining firm exit Kyrgyzstan after a tumultuous 20 years and Bishkek assume responsibility for the mine.

On April 4, Canadian mining firm Centerra Gold announced that it had reached an agreement with the Kyrgyz government, and Kyrgyzaltyn JCS, the state-owned mining company, which would see the Canadian firm exit the Central Asian state. The agreement was preceded by late March reports that the Kyrgyz government had approved such an agreement. At the time, however, the details were not known beyond the statement that they would fulfill the core terms outlined by the company earlier in the year when it confirmed it was in talks with Bishkek.

The agreement, to “effect a clean separation” includes the transfer of the Kumtor Mine and Centerra’s investments in Kyrgyzstan, the end of Kyrgyzaltyn’s involvement with Centerra, and the resolution of the standing disputes between Centerra and the Kyrgyz authorities.

In May 2021, Kyrgyz authorities moved to take control of the Kumtor Gold Mine, one of the country’s most lucrative assets. Long a flashpoint for nationalization calls, the seizure triggered a cascade of disputes that has led to this moment: Centerra looking to wash its hands of dealing with the Kyrgyz altogether.

Currently, Kyrgyzaltyn is Centerra’s largest single shareholder, with a 26.1 percent stake in the company. The announced agreement would see Kyrgyzaltyn transfer all of its 77.4 million shares to Centerra for cancellation for a purchase price of 972 million Canadian dollars (778.68 million U.S. dollars).

Kyrgyzstan would then receive from the Canadian firm 100 percent equity in its two Kyrgyz subsidiaries — the Kumtor Gold Company and Kumtor Operating Company — and assume responsibility for the Kumtor Gold Mine. This step includes a US$36 million cash payment, although $25 million would be withheld by Centerra for the Canadian tax authorities. The remaining $11 million would be paid out to Kyrgyzaltyn.

Upon closing of the agreement, Centerra would extinguish the inter-company balance between Centerra and the Kumtor Gold Company with a US$50 million payment. Kyrgyzaltyn’s two nominees to Centerra’s board would resign.

The agreement is contingent on the termination of all legal proceedings related to the Kumtor mine “with no admissions of liability.” These include all “ environmental, tax and other claims, fines, penalties or proceedings, including all criminal investigations and proceedings, in the Kyrgyz Republic” as well as the suspension of international arbitration proceedings. Centerra would agree to an order setting aside a February judgment in the Ontario Superior Court against Tengiz Bolturuk, a former member of the Centerra board of directors who, shortly after the Kyrgyz government seized control of the Kumtor Mine in May 2021, was put in charge of its operation. Centerra would then work to get its petition for Chapter 11 bankruptcy in the United States dismissed.

Not only is the agreement contingent on the cessation of all legal bickering, but it requires approval from Centerra’s shareholders (excluding Kyrgyzaltyn, for obvious reasons). The company’s press release states that it expects to hold a shareholder meeting in the second quarter of 2022 (so, between now and the end of June) to consider the matter, after sending shareholders “full details” of the agreement, the relevant transactions, the company’s rationale, and the risks.

Importantly, the company’s press release notes that “there can be no assurance” that Kyrgyzaltyn and the Kyrgyz government will fulfill the obligations laid out in the agreement, nor can it be assured that Centerra’s stakeholders and the Ontario court will approve the agreement.

If all the necessary conditions are met, the results would be a complete split of Centerra Gold from Kyrgyzstan, bringing to an end a tumultuous 20-year relationship, Diplomat writes.

Galantas Gold to kick off operations at Irish mine in June

Galantas Gold (TSX, LON: GAL) said on Wednesday it expects to re-start commercial operations at the past producing Omagh gold mine in Northern Ireland in June.

The Canada-headquartered junior said it had made significant progress in rehabilitating the underground workings, refurbishing, acquiring critical mining equipment, and installing electrical, water and ventilation systems.

Galantas, however, delayed completion of the secondary egress and installation of the manway, which is a prerequisite for the start of production, to mid-May. It said it needed the extra time for the safe rehabilitation of the ramp access and ore headings.

Omagh’s underground development was paused in 2017 until local police (PSNI) were able to increase availability of anti-terrorism cover.

Blasting activities were halted again in the late 2019 mainly because of limitations imposed by the PSNI. Ore production was then suspended in 2020 due to insufficient funds and the impact of the global pandemic.

Initial production is expected at 4,500 to 5,500 ounces for the balance of the year and to jump to 17,800 ounces of gold in concentrate in 2023, the company said in January.

A second phase development of the mine would target annual production of 35,000 ounces of gold a year, Mining writes.

Euro Sun close to getting final approvals for gold-copper project in Romania

Canada-based Euro Sun Mining said on Thursday that it is close to getting the final approvals it needed in order to obtain an exploitation permit for its Rovina Valley gold and copper project in Romania.

The company has submitted the Strategic Environmental Assessment (SEA) along with the Zonal Urban Plan (PUZ) – the final documents required prior to seeking approval by the environment ministry and subsequently getting the permits for construction, it said in a press release.

“We believe that the Rovina Valley project will provide access to significant employment and economic value in the Hunedoara area and would be a key strategic asset for Romania and the EU,” Euro Sun Mining chief operating officer Sam Rasmussen said.

The company aims to become a critical supplier of copper and gold for development of the European Union.

“Two significant examples of responsible mining are the lack of cyanide in the Rovina Valley Project’s processing circuit and the placement of dry or filtered tailings, eliminating the possibility of a catastrophic dam failure. The Rovina Valley project will provide strong economic benefits to all our local communities, the region and to the Romanian state incorporating the highest environmental practices,” Euro Sun Mining CEO Scott Moore said.

In February, Euro Sun Mining entered into a 3.5 million Canadian dollars ($2.75 million/2.42 million euro) convertible security funding agreement with Lind Global Fund II, part of which it plans to invest in the Rovina Valley project.

In March 2021, Euro Sun announced that it estimates a robust gold and copper output and total initial capital expenditures (CAPEX) of $399 million at Rovina Valley, following positive results of the definitive feasibility study which uncovered a potential average annual gold equivalent production of 146,000 ounces over the first ten years, consisting of 106,000 ounces of gold and 19 million pounds of copper per annum.

Toronto-listed Euro Sun is a mining company focused on the exploration and development of its 100%-owned Rovina Valley gold and copper project located in west-central Romania, which hosts the second largest gold deposit in Europe, SeeNews reports.

A plan to extract gold in Northern Ireland’s eastern borderlands has moved closer to fruition

Conroy Gold and Natural Resources PLC says it has now taken the last step in the process of forming a joint venture with Turkish mining firm Demir Export.

As previously reported, the plan is to mine the Longford-Down Massif – a large geological formation spanning the Northern Ireland / Republic of Ireland border.

It spans an area taking in Clay Lake in south Armagh and Clontibret in northern Monaghan.

It said today that it has now obtained some permissions from the Crown Estate to carry out work in the area.

Conroy said that this “meets the final outstanding condition precedent to completion of the joint venture”.

The joint venture will involve Demir and three separate firms, each representing a different mining area: Conroy Gold (Armagh) Limited, Conroy Gold (Clontibret) Limited and Conroy Gold (Longford Down) Limited.

In a statement released by Conroy Gold PLC, the company chairman Professor Richard Conroy said: “My colleagues and I look forward very much to working with the Demir Export team and building a long term, successful relationship.

“They have the mining expertise and the financial resources not only to bring the Clontibret gold deposit to construction ready status and into operation as a mine, but also to advance the significant gold potential of the other licences along the gold trend to the same status.

“As announced on March 14, 2022, a drilling programme by the joint venture is due to commence towards the end of April. I look forward to making further announcements in due course.”

Professor Conroy is a former Fianna Fail politician and specialist in jet lag with the Royal College of Surgeons in Ireland.

He served in the Irish Parliament from the 1970s to the 1990s, and once held the post of government spokeman for NI, News Letter reports.

Kyrgyz state seized control of the lucrative Kumtor mine from the Canadian firm Centerra Gold

Seven months after the Kyrgyz state seized control of the lucrative Kumtor mine from the Canadian firm Centerra Gold, the company has confirmed that it finally entered talks with Bishkek. Last summer, Centerra complained that Bishkek was refusing to engage in negotiations.

According to a company press release dated January 3, “Negotiations with representatives of the Kyrgyz Republic are ongoing, and there can be no assurance that any proposed resolution will be consummated or as to the final economic and other terms and conditions of any such resolution, if agreed.”

I’ve summarized the initial series of events previously:

The Kyrgyz parliament passed a law in early May [2021] allowing for the imposition of “external management” on companies with mining concession rights that are found to be violating environmental protection and safety obligations. Conveniently, on the same day the bill was passed, a Kyrgyz court issued a $3 billion fine to Centerra’s Kyrgyz subsidiary following a suit by four private citizens (one of whom was the son of the head of Kyrgyzstan’s State Ecology and Climate Committee) on behalf of Kyrgyzstan seeking reparations for the mine’s past environmentally damaging practices. Then Kyrgyz tax authorities said the company owed $170 million in back-taxes.

The onslaught culminated in the Kyrgyz government seizing control of the mine on May 17.

Centerra filed for Chapter 11 bankruptcy in the United States on behalf of its two Kyrgyz subsidiaries — Kumtor Gold Company and the Kumtor Operation Company — “to protect the interests” of the company and “prevent any further efforts by the Kyrgyz Government to strip” the mine of its assets.

The initial three-month external management was extended in August. Centerra, meanwhile, initiated international arbitration proceedings.

As 2021 came to a close, the Kumtor saga seemed stuck. Arbitration can be a very long process, so there were no clues as to how long it could drag on.

In December 2021, Kyrgyz authorities announced that they were suing Centerra over the company’s alleged blocking of user and administrator access to Kumtor’s computers from May 2021. The company pushed back, saying that “Centerra’s global IT systems restricted user access to preserve the integrity of the organization’s global IT infrastructure and its confidential information” but did nothing that put the mines’ safe operation at risk. Around the same time, news emerged suggesting that the mine’s revenues were down significantly.

In its recent press release, the company confirmed that it is in talks with Kyrgyz authorities toward an out-of-court settlement of their dispute. But the mere fact that talks are happening does not mean a resolution will come quickly or easily. Centerra’s demands set a high bar.

The press release laid out five expectations with regard to any resolution of the conflict. These include the return of state-owned mining company Kyrgyzaltyn’s shares in Centerra, which Centerra would then cancel. Kyrgyzaltyn is presently Centerra’s largest single shareholder, with a 26.1 percent stake in the company. Centerra also said that it would expect the resignation of Kyrgyzaltyn’s two nominees to the Centerra board of directors.

In addition, Centerra expects that Kyrgyzstan would assume all responsibility for the company’s two Kyrgyz subsidiaries and the Kumtor Mine. Centerra also stated an expectation of payment in cash “equal to the net amount of the three dividends paid by Centerra in 2021 that Kyrgyzaltyn JSC did not receive as a result of the seizure of the mine and certain other financial consideration associated with the settlement of inter-company balances between Centerra and its two Kyrgyz subsidiaries.”

Finally, Centerra would expect the “full and final release of all claims” and the end of all legal proceedings “in all jurisdictions with no admissions of liability.”

Put more simply: Centerra wants to wash its hands of the Kumtor headache and walk away, with at least some compensation. Bishkek, for its part, may prefer an out-of-court settlement for fear of losing in court over its seizure of the mine.

Ahead of Centerra’s announcement, Kyrgyz President Sadyr Japarov visited the Kumtor mine and issued a statement: “At present, the parties are finalizing the discussion of an amicable agreement, including, among other things, the condition for the full transfer of the Kumtor Gold Company to the Kyrgyz Republic.”


Mercury mining makes a comeback in Kyrgyzstan

Mercury, used in gold mining and electronics, poses serious health risks. Despite international pressure to ban its trade, Kyrgyzstan is ramping up production.

Just north of Aidarken, a town in Kyrgyzstan, smokestacks tower over hillsides streaked with red. Deep underground, men wearing headlamps toil away in the dusty dark, breaking rocks with sledgehammers. They are mining cinnabar ore, the mineral processed into mercury — a gleaming, silver-colored metal with dangerous properties.

The Aidarken mine is one of the  on Earth where new mercury is legally extracted for the international market. Since 2013, 135 nations have signed the Minamata Convention, a global agreement that bans new mercury production and aims to phase out most international trade in the metal.

But Kyrgyzstan, which sees mining as a cornerstone of its economy, isn’t one of them. The country is now ramping up mercury production, even as researchers warn the metal poses a health risk not just to people living near the mines, but around the world.

“I believe that mercury pollution of the environment is not only our problem,” said Makhmud Isirayilov, the head of a nearby laboratory run by the Health Ministry. “This is a global problem.”

A lucrative international market

Mercury mining in Aidarken, a town of roughly 10,000 people, began in 1941 when Kyrgyzstan was part of the Soviet Union and scrambling to find new sources of metal. After the Soviet Union’s collapse, the plant remained a state-owned venture, producing mercury for export to China, Russia, Kazakhstan, Ukraine, India, France and the United States.

Though the market has shrunk since the establishment of the Minamata Convention, mercury is still a $38-million (€32-million) industry worldwide and a significant driver of the regional economy in Kyrgyzstan’s impoverished Batken province, where per capita production is about 2.5 times lower than the national average.

The metal is used in manufacturing certain types of lamps, electrical equipment and batteries and is also a major component in artisanal and small-scale gold mining, mainly in South America and sub-Saharan Africa.

A 2015 global inventory found these activities emitted about 2,500 metric tons of mercury into the atmosphere annually. Illegal mercury mining is also a thriving black market, even in countries that have signed onto the Minamata Convention, and is particularly destructive in the Amazon.


Velocity exercises option to acquire 70% stake in Makedontsi gold project in Bulgaria

Canadian gold exploration company Velocity Minerals said that it has delivered a notice of option exercise to Bulgarian metal ore mining company Gorubso-Kardzhali for the Nadezhda property which includes the Makedontsi gold project.

“Following delivery of the exercise notice, Velocity is deemed to have earned a 70% interest in the property and to be in joint venture with Gorubso for the further development of the property,” the gold exploration company said in a statement on Tuesday.

To fulfill the terms of the option agreement with Gorubso, Velocity was required to deliver an environment impact assessment prepared in accordance with the Bulgarian Environmental Protection Act. Velocity will sole-fund 2,000 m of future drilling and deliver a mineral resource estimate, the company added.

Mineralisation at Makedontsi is outcropping locally but elsewhere the prospective sediments are covered by a thin veneer of post-mineral limestone estimated to range from 10 to 30 m thickness, Velocity said.

“Exploration at Makedontsi to date, including eight diamond holes and 14 reverse circulation holes, was completed to test the grade and extents of historical drilling. Drilling intersected mineralisation, starting from surface, and the mineralisation remains open for expansion,” the company also said.

Future drilling will continue to test for extensions of mineralisation, Velocity added.


Last year, a small-scale “battle” took place in a picturesque stretch of mountains in Armenia’s Vayots Dzor region

The Armenian government is caught between a rock and a hard place as it tries to mediate between environmental activists and an international mining company.

Last year, a small-scale “battle” took place in a picturesque stretch of mountains in Armenia’s Vayots Dzor region.

For years, Lydian Armenia, a subsidiary of Jersey-registered mining company Lydian International, had been trying to set up a gold mining operation at Amulsar in the south of the country, much to the chagrin of locals and environmentalists.

Following Armenia’s so-called Velvet Revolution of 2018, which swept a reformist government, led by Nikol Pashinyan, into office, protesters had felt emboldened and subsequently blockaded the site, setting up mobile homes on the road to prevent any heavy machinery from passing through.

Last year, Lydian Armenia hired a private security company to begin removing the mobile homes. This led to fistfights and clashes between protesters and private security forces, requiring the intervention of the police. Dozens were arrested.

Now, more than a year on from this “battle”, the dispute continues, with little hope of a resolution in sight.

Lydian Armenia first discovered the gold deposits in Amulsar in 2005. In 2012, the company signed an agreement with the Armenian government – then led by the controversial Serzh Sargsyan – to begin exploiting the resource. According to some estimates, the company has already invested 400 million US dollars into the project, despite not even starting actual mining operations.

According to Armenia’s Ministry of Economy, the mine, when fully operational, can raise Armenia’s GDP by up to 1.14 per cent in just its first year.


However, plans for the mine have from the start been met with opposition from environmentalists. Their main concern revolves around the potential use of cyanide in gold mining. According to chemist Oksana Kharchenko, cyanide is widely used in gold mining operations around the world because of how easily it combines with metals.

“Cyanide is used to leach gold from ore,” she says. “This means that by applying a cyanide solution over a pile of ore, miners can extract just the gold. Of course, because cyanide is poisonous, if large quantities find their way into water sources, for example, this could cause major negative effects to people’s health.

Located in the Arpa and Vorotan river valleys, ecologists say that the Amulsar mine carries a major risk of pollution. This in turn would have a major impact on the ecosystem of Armenia’s iconic Lake Sevan.

Amulsar is not the first time that the use of cyanide in gold mining has stirred controversy in Central and Eastern Europe.

In Romania, a decades-long dispute between environmentalists and a mining company, Gabriel Resources, which wanted to mine gold in the ancient Roman mining town of Roșia Montană, was only resolved in 2020 when Romania applied to UNESCO to protect Roșia Montană as a World Heritage Site. (Roșia Montană was added to UNESCO’s list in July of this year).

Much of the opposition to mining at Roșia Montană stemmed from a large cyanide leak which occurred at an Australian-owned gold mine in northwestern Romania in 2000. Over one million cubic metres of cyanide-contaminated waste spilled into the Tisza and Danube rivers, killing fish and poisoning water supplies for hundreds of kilometres downstream, even affecting neighbouring countries Hungary and Serbia.

Earlier this year, Kyrgyzstan was also in the headlines for its attempts to nationalise the Kumtor gold mine, the largest in the country, for persistent reports of environmental violations by the mine’s Canadian owners. The most serious was in 1998, when a truck carrying two tonnes of sodium cyanide crashed into the Barskoon river, dumping its load into the water. Around 2,000 people were hospitalised in the aftermath.

Green light, red light

In Armenia, one of Pashinyan’s first acts as prime minister was to commission Lebanese company ELARD to investigate the potential negative impact of the Amulsar mine. A report was produced concluding that there were significant areas where Lydian’s environmental protection measures fell short, but that the possible impact on nearby water sources – including Lake Sevan – was nil.

Pashinyan put a positive spin on the report and used it to give the project the green light. However, following protests and much opposition from Armenian civil society, who claimed that the report in fact made it clear that the mine would cause environmental damage, he changed his mind just two weeks later, saying that his government would continue to study whether the mine would in fact be safe for the environment.

Back to square one, the standoff continued.

The Armenian government now finds itself in a difficult position. It is reluctant to ignore the very persistent demands of the protesters, particularly as his government portrays itself as more open, democratic and consensus-based than its predecessors.

However, at the same time, acquiescing to the demands of the protesters could hurt investors’ confidence in Armenia.

The country already lacks foreign capital and can scarcely afford to scare away other potential investors. Furthermore, halting the project, after Lydian Armenia has already spent hundreds of millions of dollars, could open the door to the company taking legal action against the Armenian government and demanding compensation.

It will no doubt be aware that Gabriel Resources has filed a 4.4 billion US dollars arbitration claim against Romania for alleged investment treaty violations in relation to the Roșia Montană project.

Pashinyan and his government have been largely silent on the issue for the past two years, although last month Deputy Prime Minister Suren Papikyan did say that he was “inclined to operate the mine”.

He added, however, that “it’s rather difficult to say when the Amulsar gold mine will be opened”.


The gold mine has been through four stages of development since it was founded and a fifth development phase is currently underway

The Muruntau gold mine, located in the Qizilqum (aka Kyzyl-Kum) desert in Uzbekistan, is the world’s biggest open-cast gold mine. Discovered in 1958, surface mining started in 1967 and dug the giant kilometres-wide hole that the mine is today. Owned and operated by Uzbekistan’s state Navoi Mining & Metallurgy Kombinat (NMMC), it is also going to be put up for privatisation and is the biggest asset the country has to offer for sale.

“We are the biggest company in the country and the number one contributor of taxes to the government. About 20% of the total tax take is combined money!” said Nikolai Snitka, the jolly chief engineer of Navoi Gold who has worked at the mine for almost four decades.

In Soviet days the city was closed to visitors and populated with a big contingent of Russians and especially Ukrainians (Snitka is Ukrainian), as those countries have strong mining communities. But today the nearby city of Navoi is flourishing, as both the city and the economy have been thrown open.

The gold mine has been through four stages of development since it was founded and a fifth development phase is currently underway, due to finish in 2026.

The first goal has been to produce more gold. The mine got a new lease of life in 2016 when Uzbek President Shavkat Mirziyoyev took over and began a $3bn investment programme.

“The plan is to increase production by 30% by 2026. We are not there yet but we hope to reach the 30% target earlier – in 2024,” says Snitka.

The equipment has been upgraded and consultants brought in to improve efficiency. Muruntau churns out 80 tonnes per year (tpy) of gold and this year it is on track to produce 82 tonnes from reserves of an estimated 101mn ounces, worth at today’s prices some $190bn. The preliminary valuation of the business is $10bn, but Snitka says that he thinks it is worth more.

The Central Bank of Uzbekistan (CBU) has the right to buy the gold produced and half the country’s hard currency reserves are of the yellow metal, but after that under the new liberalised rules the company is free to sell gold as it likes on the international markets.

A large part of the mining operation is simply processing the tailings left over from decades of production during the Soviet period. Originally the US firm Newmont mining came into a joint venture to work the tailings as the Soviet technology was inefficient and the tails retained a significant amount of ore. But Snitka says the main mine is also being expanded and deepened.

“There is 3mn tonnes of tailings still to process but there is also 50 years of opening mining at Muruntau left to do. Now we are modernising the pit and the processing plants to expand the operations,” says Snitka.


In parallel with the modernisation of operations are the preparations for privatisation. The company has already been reorganised into a joint stock company and a board of directors appointed. The international consultants McKinsey have also been hired to advise and are now currently valuing the company’s assets.

The business has been rationalised. Part of the problem is to separate out all the parts of the business, as in addition to gold the mine also produces uranium, as well as a few other minerals and metals. Uranium complicates things, as its production and sale is an internationally regulated business, which makes it problematic to sell, so the uranium business will remain in state hands, while the gold part will be sold.

“100%!” says Snitka enthusiastically. “We are ready to go. All the work is nearly done. We need to be completely transparent. The mine could be sold on January 1 if we wanted, although it’s not decided when to actually sell it.”

Snitka stresses that the international consultants and the revamp of the production have brought everything up to international standards from the financial IFRS accounting through to the daily health and safety work practices.

Snitka seems to be enjoying the changes. He has worked at the mine for 42 years, but boasts that some of his expert colleagues that are putting the changes into place are only 35 years old.

“For 20 years we were a closed company but today it’s all changed. We are not that kind of company any more,” says Snitka. “Privatisation is the right idea. It is inevitable.”

The final decision on how and when to privatise the mine has not been taken. One option is to do a dual listing on the Tashkent Stock Exchange (TSE) and an international exchange such as the London Stock Exchange. Another would be to sell to a strategic share or at least partner with one of the world’s leading mining companies. And the consensus seems to be that the state would like to sell NMMC within the next two years as part of a general drive to get the state out of the economy.

In general the state is intending to throw the entire mining sector open to investment. On October 6 the Uzbek presidential administration announced that for the first time, beginning in January next year, licences for geological exploration and production of hydrocarbons, non-ferrous metals and ores will be put up for auction. The new measures also include tax incentives for land and subsoil use and lower customs duties to attract investment.


Zijin Mining began operations at a new Serbian copper and gold mine

China’s Zijin Mining began operations at a new Serbian copper and gold mine expected to make the Balkan country Europe’s second-largest copper producer.

The Cukaru Peki upper zone of the Timok copper and gold project is part of Serbia’s only copper mining complex, the RTB Bor operation owned by Zijin.

It has invested $474-million so far in the new underground mine, which is expected to have annual capacity of 3.3-million tonnes of ore.

“The first part of the project involves mining an ultra high-grade ore body. It is expected to produce 50 000 t of copper and 3 t of gold in 2021,” the company said on its website.

With the opening of the lower zone of the Timok project, Serbia’s share of Europe’s total copper output could rise to 18% from 5%, which the energy ministry has said would make Serbia Europe’s second-largest producer behind Poland.

“This project … is important for the development of Serbia’s economy and also for strengthening cooperation between Serbia and China,” China’s ambassador to Serbia, Chen Bo, said at the mine’s opening ceremony in Bor.

In 2018 Zijin Mining became Serbia’s strategic partner in RTB Bor, pledging to invest $1.26-billion in return for a 63% stake.

At the opening ceremony in Bor, Serbia’s President Aleksandar Vucic said the Chinese investment would bring benefits to the company and impoverished eastern Serbia.

China has so far invested billions of euros in Serbia, mostly in the form of soft loans to finance highway and energy projects, as part of its so-called belt and road initiative to open new foreign trade links.