Since Kyrgyzstan seized the gold mine last year, it has been the source of constant scandal

“It’s a secret” is becoming a catchphrase to describe how Kyrgyzstan is currently being administered, especially as concerns the giant gold mine that authorities seized last year in the name of a long-suffering public.

To begin, the sudden fall off in reporting on activities at the economically vital Kumtor mine was easily explained away.

Kyrgyzstan’s government was locked in a legal dispute with Toronto-listed Centerra Gold, Kumtor’s operator prior to the sudden imposition of “external management” – code for nationalization – in May 2021.

Making information about the mine public would have given Centerra the upper hand, top officials argued at the time.

But that legal standoff was settled amicably and for good in July of this year, while Kumtor is still a high-altitude shrine to opacity.

One of the biggest concerns is the mixed messages coming from the top leadership.

Last September, Kyrgyzstan’s national security chief Kamchybek Tashiyev boasted in a public appearance that “not a gram” of gold produced at Kumtor had left the country that year.

His claim did not tally with data from the national statistics committee, which showed gold had continued to be Kyrgyzstan’s chief export.

In fact, committee data released this July revealed that Kyrgyzstan had exported record quantities of gold – 24.8 tons – in 2021.

But the committee did not account for where the vast majority of this bounty had been sold, referring to an “undefined country” as the purchaser of 19.2 tons, or 77 percent.

Switzerland is well-known as a longstanding destination for Kumtor’s gold, and sure enough, Swiss trade statistics confirm that was where the gold had been received.

So why the secrecy?

In an interview last month with state media outlet Kabar, President Sadyr Japarov said that the identity of the importing country had been classified “for the security of the delivery.”

Bizarrely, the statistics committee had already identified Switzerland as the destination for exports of a smaller quantity of gold – just over a ton, along with the United Kingdom (4.08 tons) and “others” – 0.47 tons.

Japarov and Tashiyev, whose campaign to nationalize Kumtor began a decade ago when the pair were an opposition tandem, are Kyrgyzstan’s two most powerful politicians.

The third leg of the stool is chief minister Akylbek Japarov, not a relative of the president, but who is just as vague as his boss when it comes to answering questions about Kumtor.

Earlier this month, when pressed to report on Kumtor to parliament, he declared his government’s readiness to “answer for every milligram” of gold in due course.

He further complained that media outlets were stirring discord over Kumtor. “Gold is not a toy!” he warned.

Every week seems to bring something new to feed speculation surrounding Kyrgyzstan’s largest asset.

Last week it was the emergence of a photo online showing President Japarov’s older brother, Sabyr, clutching a pair of gold bars.

The president’s spokesman Erbol Sultanbayev provoked guffaws when he suggested the snap had been taken in 2016 or 2017, a period when Sadyr Japarov would have been either living abroad or serving out a jail sentence on kidnapping charges. The fact that Sabyr Japarov was holding a face mask, and that the man next to him was wearing one – seemed to point to a more recent date.

Japarov cleared the air during another interview with Kabar on September 8, explaining that the photograph of his brother was taken in Turkey last year and that a Turkish metal refining company that wanted to buy Kumtor’s gold had reached out to Sabyr as a bridge to the president.

No deal materialized, he said.

The president advised people not to “turn this [the photo] into some tragedy.”

Another mining mystery is how things went so wrong for Japarov’s one-time golden boy Tengiz Bolturuk.

Even before the beginning of the seizure of Kumtor, Bolturuk had been a close ally of Japarov’s, representing Kyrgyzstan’s interests on the board of Centerra Gold where he quickly gained a reputation as a hostile interlocutor.

When state officials seized Kumtor in May 2021, he ditched that obsolete role to become the mine’s external manager.

Bolturuk’s three-decades of industry experience proved invaluable to Bishkek in the transition to national control over Kumtor, but his overnight superstardom ruffled feathers.

A brand-new government holding that he chaired called Great Nomads Heritage emerged to become arguably the most important player in the national extractive industry.

He made enemies both in parliament, where some lawmakers complained about his Canadian-Kyrgyz dual citizenship, and at the state mining champion Kyrgyzaltyn, where he reportedly called the shots without formally holding a position.

But in August Bolturuk was declared to be under criminal investigation over financial misdemeanors that were detected at Kumtor in contracts for fuel, food and equipment.

Worryingly for Bolturuk – a native of Japarov’s home district of Tyup in Issyk-Kul region – the president has said absolutely nothing in his defense.

“I did not allow anyone to interfere in his work and I did not interfere myself, so that he would not later be able to say that because of me he could not fulfill his duties,” Japarov told Kabar of the investigation.

On September 13, Kyrgyzstan’s state prosecutor said it had opened three criminal cases as a result of the investigation with estimated damages to the state totaling more than $12 million. Bolturuk and two others were reportedly taken into custody, Eurasia writes.

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.

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.

Source: dw.com

Centerra Gold Inc. is claiming a Kyrgyz open-pit mine it once ran has flooded and poses safety and environmental risks

Centerra Gold Inc. is claiming a Kyrgyz open-pit mine it once ran has flooded and poses safety and environmental risks, although the government-appointed administrator says the water has always been there.

There may be at least 40 meters (131 feet) of water at the bottom of the Kumtor central pit, the Canadian mining company said Tuesday in a statement, citing photos on Kumtor Gold Co.’s website and a company video posted mid August on Facebook.

Kumtor’s administrator said in response that the amount of water has always been present and it’s used for the mine’s needs, according to a statement Wednesday. It added that the information presented by Centerra “doesn’t correspond with reality” and is an effort to “undermine the reputation” of the administrator.

Centerra’s concerns stem from the fact that it owned and operated the mine through subsidiary Kumtor Gold under a 2009 agreement with the government, before the Kyrgyz Republic seized the facility in May on environmental grounds and tax issues. It’s now the subject of international arbitration initiated by Centerra. Kumtor Gold filed for Chapter 11 bankruptcy in New York on May 31.

Centerra has also called for discussions on the issue, but the Kyrgyz government said in June that it will be extremely hard to build a dialog. The Toronto-based company now alleges that current management is not providing the resources necessary to safely operate the mine, thus endangering Kumtor workers and threatening the sustainability of the entire operation.

“Water in an open-pit mine decreases stability and increases the risk of a wall failure”, Centerra Chief Operating Officer Dan Desjardins said in an emailed statement. “For Kumtor, pumping water out of the mine and treating it properly to remove contaminants has always been critically important to the safe operation of the mine given its proximity to glaciers”.

A buildup of water could penetrate pit slopes and cause potential contamination of nearby waterways, said Gavin Wendt, a senior resource analyst at MineLife Pty. There’s also a risk of subsidence, which would be extremely time-consuming and costly to resolve, as well as being potentially fatal for any workers operating within the mine itself.

“The primary issue of water residing in an operating mine is the danger presented by instability to the pit itself”, Wendt said. “Typically, water and mines don’t mix”.

Desjardins, who managed the mine for five years as the president of Kumtor Gold until January 2020, has urged the management to retain independent mining experts to assess the condition of the mine and to publish the findings.

Source: bloomberg.com

Kyrgyzstan to nationalize gold mine Kumtor

In May, it became clear that dark clouds had gathered over Centerra Gold Inc, a Canadian-registered company operating the high-altitude mine, 26 percent of which belongs to the Kyrgyz state.

In the early 1990s, it was hoped that a large gold mine in eastern Kyrgyzstan, near the Chinese border, would lift the newly independent country’s economy out of the shatters of Soviet central planning. But 30 years into its operation, Kumtor has for many come to symbolise some of the developing world’s greatest ills: corruption, environmental degradation and neocolonial greed.

First, a court ruled that the mine had committed environmental violations by dumping mining waste on glaciers, a move that caused their gradual erosion and cost the state $3bn. Soon after, the parliament backed a proposal of the special commission on Kumtor to introduce state management at the mine for three months. On May 14, President Sadyr Japarov approved the plan, which effectively brought the mine back into the state’s hands. Later, a number of high-profile politicians accused of financial crimes related to Kumtor were arrested.

In response, Centerra Gold initiated binding arbitration proceedings against the government for what they viewed as a violation of mutual agreements. Its Kyrgyz units – Kumtor Gold Co and Kumtor Operating Co – applied for bankruptcy in a US court and the company says it will seek compensation from the government.

“In 1994, after the Kyrgyz people gained independence and with your help, we began building the Kumtor Gold Mine with an initial life of 18 years. To this day, what we created together is something special that engineers from all over the world come to study,” Scott Perry, Centerra’s president and CEO, wrote in a statement.

“The seizure of the mine is based on false information and groundless allegations that undermine everything we have built together. We fear that the government’s unjustified action will put thousands of well-paying jobs and the businesses of hundreds of Kyrgyz suppliers at risk.”

Perceived as ‘source of elite enrichment’

 

Pressure grew on Centerra after January’s presidential elections, which saw Japarov sweep to victory after a campaign promising national revival. He had been designated to rule the country as interim president and prime minister following an uprising last October against political corruption and a disputed parliamentary election, the third upheaval since the country’s independence. And it was gold that brought him to power.

Months before winning a landslide, he was freed from prison where he was serving an 11-and-a-half-year sentence for kidnapping a local official during one of his protests against Kumtor.

Since 2013, he has been the main figure in the movement against foreign corporations he accuses of exploiting Kyrgyzstan’s scarce resources. He believed that the country’s elite were benefitting at the expense of the people and the environment. Many locals shared his view.

“Over 30 years of mining based economic model, the extraction of natural resources became perceived by the populations as another source of elite enrichment,” Asel Doolotkeldieva, a researcher in the Kyrgyz capital Bishkek focused on the politics of resource extraction, told Al Jazeera.

“They believe that investors, together with the elite, seek to enrich themselves, plunge the resources and go away as soon as the resources are emptied.

“The extractive industry provides only 3 percent of jobs nationwide. The mines are being exploited, the resources are being emptied, the government is getting richer but local communities, despite some development and charity projects, do not see a direct impact on their lives.”

At the same time, there are concerns over the environmental damage caused by the mine.

“The waste is being stored on glaciers, and according to estimates, after the exploitation of Kumtor ends, it will weigh 1.8 billion tonnes. It will remain there and influence the environment. The glaciers are one of the sources of water of the Kumtor River, which flows into Taragai River, and then to Naryn River – Syr Daria, the biggest transboundary river of Central Asia,” Kalia Moldogazieva, an expert in environmental protection, told Al Jazeera.

“We have spoken against the Kumtor project from the very beginning because it is located in the glacier zone. Glaciers melt due to global warming anyway and in Kumtor, they are additionally affected by the anthropogenic factors.”

Miner support for Japarov

 

In February 1995, Murat was not prepared for the job. The temperature was -45 degrees Celsius (-49 degrees Fahrenheit) when his feet first touched the mountain that was meant to be Kyrgyzstan’s pride. The dry freezing wind at 4,000 metres (13,123 feet) above the sea level made it hard to breathe.

“I have never seen anything like that before. We felt like we were on another planet,” said Murat, 59, who worked in Kumtor for eight years. “They [company bosses] invited us for dinner in a hall that looked like a restaurant. Then they gave us canned coke. It was the first time I saw it.”

He quit in 2003, and by that time he had managed to build a house at the Issyk-Kul lake, where Japarov hails from, and supported his relatives for many years. Work in Kumtor was hard, Murat said, but the company was a fair employer. Overtime was paid double, safety was always a priority and he was grateful that he could work with the newest technology.

“We received medals every five years, clothes, gifts. They were good to us and at the time we were only thinking about ourselves, our families, money. Everyone wanted to get rich.”

But over time, Murat changed his views. Today, he is happy with President Japarov’s nationalist reform agenda.

“Kyrgyzstan was not ready for that. We agreed for gold extraction a bit too early. Our technology was not good enough to operate high up in the mountains, in the cold. Now we deserve Japarov. We’re done with the lies.”

Murat shows pictures from his Kumtor years and a nostalgic mood takes him over. Soon after, he reaches out for a small book: poems to Japarov written by his supporters when he was still in prison.

“May Sadyr be released! He will get the work done! He was punished for no reason, if someone like him comes to power, he will clean our country of dirt.”

Source: aljazeera.com

 

 

The power of Kyrgyz Kumtor gold mine

Kumtor has a long and twisted history. Exploration first started in 1978, but the Soviet state did not have the resources to bring it online. Since operations started in 1997, on average approximately 17 tonnes of gold have been mined every year at Kumtor, which sits at 4,000 metres above sea level. In the words of one expert, Kumtor is the largest mining operation in the world that interferes with glaciers.

Kyrgyzstan’s new government, which came to power in the chaos that followed last year’s parliamentary election, has now revoked the mining license for the Canadian company, Centerra, which operates Kumtor. The government is demanding $3bn in compensation for the mine’s ecological damage. This sudden interest in protecting the environment is unusual for Kyrgyzstan, where the authorities have previously chosen to ignore the problems.

But while locals remain divided over Kumtor, few today doubt the mine’s impact on the surrounding environment and, as a consequence, on the health of the population living nearby. Moreover, there is a genuine risk of significant environmental damage that could affect not only Kyrgyzstan, but Central Asia more broadly.

A chequered history

 

After Kyrgyzstan gained independence, the Canadian corporation Cameco began developing the mine. At that time, the Kyrgyzstani state held a 67% interest in the mine, with Cameco holding the remaining 33%. But following a restructuring in 2003, Cameco’s and part of the state’s share went to a Cameco subsidiary, Centerra, diluting the state’s hold to 33%. Today, thanks to a series of ‘unprofitable’ agreements, Kyrgyzstan owns 26.4% of the shares in the mine – the largest industrial investment in the country.

Kumtor is responsible for 12% of Kyrgyzstan’s GDP, and 23% of its industrial output. More than 4,000 people work at the complex, and the majority are Kyrgyzstani citizens. According to a Kyrgyzstani state commission, the state has received $1.44bn in royalties and taxes from Kumtor, while Centerra has made $11.5bn. Unsurprisingly, Kumtor has become a site of struggle – both in terms of political control and environmental concerns. Over the years, politicians have held multiple protests in support of nationalising the mine and keeping profits in the country. Their number includes Sadyr Japarov, the current president, who came to power amid street protests and a legitimacy crisis last autumn, and his allies, the head of state security Kamchybek Tashiev and parliamentary speaker Talant Mamytov.

While Kumtor has certainly contributed to Kyrgyzstan’s often stretched state budget, it has also become an urgent environmental problem. Mining at Kumtor is directly connected to damaging the surrounding glaciers, which in turn feed the Naryn river. Together with another river, the Karadarya, the Naryn forms the Syr Darya, one of the main river arteries in Central Asia that crosses Uzbekistan and Tajikistan, eventually flowing into the Aral Sea in Kazakhstan. Pollution or reduction of the river’s waters carry potentially catastrophic consequences for the whole region. Specifically regarding glacier damage, Centerra states that its “operations and activities always carefully adhered to applicable laws and project agreements which were approved by the Kyrgyz Republic Parliament and Constitutional Court in 2009.”

Environmental estimations

 

The environmental damage at Kumtor has been known for a long time. Through the years, Kyrgyzstani parliamentarians have inspected the mine on multiple occasions. In 2012, for example, a state commission recommended that the environmental offset payments be raised, a new tailings dump be built, and a fine of roughly $79m. After long arguments, the state and mining company came to a compromise, and the fine was ‘forgiven’. In 2017, the government adopted new amendments to its water code, which, in effect, legalised mine production at two glaciers, Davydov and Lysy. Relations between Kumtor management and the Kyrgyzstani authorities finally broke down after Japarov, the nationalist politician who was sprung from prison last October, became president in January. Parliamentary deputies convened a new state commission to inspect operations at Kumtor, which recommended a $5bn total payment over glacial erosion, unpaid taxes, interests and fines. Over the past 25 years, the commission’s report stated, 178m cubic metres of the Davydov glacier have been destroyed.

In May, a court in Kyrgyzstan’s capital, Bishkek, ordered Kumtor to pay a $3bn fine for dumping mining waste on the glaciers and damaging them. Parliament then approved introducing state management at the mine for three months. With this news in the background, Centerra’s stock price fell by 30%.

“The leadership of the Kyrgyz Republic has acted with astonishing speed since the beginning of this year to undermine the basis on which the Kumtor Mine has been operated,” said Centerra Gold, which announced it was ready to “engage in a constructive dialogue with the Kyrgyz authorities”.

According to its website, the company “worked with the Kyrgyz government to develop annual mine plans, including for the disposal of waste rock. The government, including the state agency responsible for the environment, approved KGC’s mining plans and permits every year.”

Centerra has now filed an international arbitration lawsuit against the Kyrgyzstani government, claiming that the authorities’ actions were illegal. In addition, Centerra’s subsidiaries, Kumtor Gold Company and Kumtor Operating Company, initiated bankruptcy proceedings in New York. On 8 June, their applications were granted. According to the court ruling, these companies cannot be held criminally liable, they cannot be sued, and their property cannot be confiscated.

“We have always resolved differences in our relationship through negotiation and compromise,” the company said. “This time, we are concerned that the government is pursuing a premeditated effort to nationalize the Kumtor Mine or force Centerra Gold to give up ownership.”

At the culmination of this standoff, several Kyrgyzstani politicians were detained as part of a corruption investigation into Kumtor, including a former prime minister, Omurbek Babanov, as well as parliamentarians Torobay Zulpukarov and Asylbek Jeenbekov. (The latter is the brother of former president Sooronbai Jeenbekov.) On the condition of anonymity, one Kumtor employee, Timur (name changed), told openDemocracy that Centerra management had seen this change in policy by the Kyrgyzstani authorities coming, and were prepared for the confrontation. “Gradually, they have assigned less and less money for operating expenses, and costs have been cut,” said Timur. When contacted, Centerra responded that this assertion was “not true”, and pointed to a three percent increase in total operating expenses between 2019 and 2020 – and when combined with capital expenditures, a 17% increase between 2019 and 2020. “Due to the Kyrgyz government’s unnecessary actions,” the company said, “plans […] announced earlier this year to invest an additional US$2 billion to extend the life of the mine are now on hold.”

“Over the past three years, all of our servers have been transferred to a repository located in the United States,” Timur continued. “After leaving Kyrgyzstan, [the company] remotely blocked access to programmes used to operate the mine. All the data was damaged, so specialists had to restore everything bit by bit.”

In an email to openDemocracy, Centerra stated that “all key safety, monitoring and operational systems at the mine were functioning properly” prior to the introduction of external management.

“When the government authorities seized the mine and attempted to access IT systems, including by seizing computers and passwords of individual Kumtor employees, Centerra Gold’s global IT systems restricted access from Kumtor to preserve the integrity of the Company’s global IT infrastructure and its confidential information. None of these systems are required to operate the mine safely,” the company said.

Speaking to openDemocracy, Timur said that employees’ final month’s salary had not been paid in full after the salary calculation system was also blocked by Centerra. “We are still in shock. Employees have always had a good relationship with management, but, frankly, they’ve left us in the lurch.”

Centerra stated that it “paid employee salaries through mid-May as we were obligated to, at which point the Kyrgyz government took control of the mine, making it responsible for the health and safety of employees and all wage payments.

“None of the Centerra Gold systems prevent the government agents who are now in control of the mine from paying workers in full and on time.”

Since state management has been introduced at Kumtor, the mine’s operating principles have not changed, but, Timur notes, tension among employees is growing. Workers want to know how long the state will be able to bear the burden of running the mine. In recent years, working conditions have noticeably deteriorated, and now many are thinking about looking for a new job.

“There’s no difference who you end up working for. We know that it will definitely not get better,” Timur said.

“Most employees, whether workers or line managers, aren’t sure of their future or what’s happening now. Everyone is pessimistic. Most of all, we are worried about the fact that salaries will be reduced or the company will be closed altogether. At the same time, everyone has loans and large families to provide for. I’m already looking for another job. But the fact is that not everyone will be able to find one.”

What do the locals think?

 

Like the mine’s employees, the thousands of residents living in the area around Kumtor are equally concerned about the fate of the mine. The village of Tamga, with its one-storey houses, rickety fences and unpaved roads, is home to 3,000 people. A couple of shops that sell everything from clothes to building materials mark the centre of the village. In addition to breeding cattle and selling crops from their own farmsteads, there is little else for people to do here. Near one of the houses, a woman named Gulsina is diligently watering the flowers on her lawn, wearing a bright headscarf. Tamga has been her home for 20 years. According to Gulsina, the state of the environment in the villages around Kumtor leaves much to be desired. The tops of the mountains used to be completely enclosed in ice, but that’s no longer the case. Intense melting has led to local residents facing a water shortage.

“The ecological situation in our village is getting worse every year, and there is less and less water. There are practically no glaciers left. Because of this, the river is almost empty, there is hardly enough water for the fields,” Gulsina says.

“We drink water from the river and this affects our health. Many have poor eyesight, sore joints. Most of all I feel sorry for the children. We don’t know how healthy they will be, given this whole situation. But the Kumtor people still help us more than the state, and provide many people with jobs,” she adds.

Gulsina has yet to make up her mind to sell her property and leave Tamga, though her relatives have been living in Bishkek for a long time.

Another resident, 58-year-old Pavel, has his own guest house in Tamga, which he opened more than 15 years ago. More often than not, the rooms are empty, but in the summer foreign tourists travelling along the southern shore of Issyk-Kul come to stay. Pavel also does not want to think about moving to another place: his business is based on his love for his native land and memories of his family.

Like other local residents, Pavel is aware of everything that happens at the gold mine. He, like Gulsina, agrees that gold mining at Kumtor has contributed to environmental problems in the village, but says it is wrong to only blame the mine.

“There is a twofold situation here. You can’t say that all the problems come from Kumtor. Of course, it brings profit to the state, but at the same time, its activities have a bad effect on our glaciers. But gold’s not worth spoiling the environment for. Every human intervention in any case has a negative impact on nature,” he says.

Local residents are concerned about excessive dust on the service road leading to the mine. This problem has been talked about for several years, but the situation is still unchanged.

“When heavy trucks are moving, a huge column of dust is raised and deposited on glaciers and vegetation,” Pavel says. “But we get our water from these glaciers. Not all houses have drinking water, so for now we are taking water from the river, which then stagnates. But we still don’t know how safe it is. Of course, this raises concerns.”

Centerra states that it “regularly analyzed water quality at more than 30 sampling points in the area and never found evidence of contaminants in the drinking water”, and set up drinking water infrastructure for more than 40,000 people in the local area.

“We’ll have to fight for our water”

 

The village of Barskoon is only nine kilometres from Tamga, but you see the difference in living standards immediately. The buildings are of better quality, on several streets you can even see mansions, and all the roads are covered in tarmac. Almost every local resident has a car. And there is an explanation for this: more than 30% of Barskoon’s 10,000 residents work at Kumtor. The average salary at the enterprise is $1,500 dollars for a two-week work session.

On the side of the road that runs through the Barskoon valley and leads to Kumtor, an elderly man in ak kalpak, the traditional Kyrgyz headdress, is carefully examining the endless lines of the mountain ranges. Israil has lived in Barskoon since birth. Twenty three years ago, he was one of the villagers who suffered from a disastrous cyanide spill.

In May 1998, a Kumtor truck carrying 1,740 kg of sodium cyanide fell off a bridge into the Barskoon River. This led to the deaths of two people, and 2,000 residents of the Issyk-Kul region were directly affected, while 17,000 patients received medical assistance. The authorities stated that the scale of the cyanide leak was insufficient to cause serious damage to the ecology of the region, but according to local residents, the poisoning had a strong effect on human health.

Israil, like other residents, believes that after the accident the water was disinfected with chlorine, as a result of which people were poisoned by cyanogen chloride, a toxic chemical compound.

“When the accident happened, many people had different types of wounds. Some had peeling skin, and some had signs of poisoning,” Israil recalls.

“People didn’t know that you couldn’t drink this water, or water the garden with it. My wife had weeded our potatoes, and she developed allergies all over her body. Doctors diagnosed scabies. But she had sores that felt like needles when touched. My eyesight deteriorated sharply. They were in a terrible condition. The village was almost dead. The dogs didn’t even bark.”

When asked about how Kumtor affects life in Barskoon today, Israil cites poor air quality in the village. “Our main problem is air. My sister lives in the Ton district. When she comes to visit us, it becomes difficult for her to breathe. A lot of dust from the mine comes to our villages with the wind. Perhaps this is the reason for the poor air quality.”

In its 2019 environmental report, the company states that it waters the technical road regularly to keep dust down, and collects data about dust levels.

The climate in the area has also become drier, Israil says: it rarely rains, and less and less snow falls every year. Residents blame Kumtor for this. But there can be no question of closing the enterprise, Israil adds. Otherwise, thousands of people will suffer. For many families, working in the mine is their only source of income. “It is impossible to close Kumtor at the moment. Many of our villagers work there, receive good wages and provide for all relatives. We simply cannot live without Kumtor,” he says.

It is obvious that attitudes to Kumtor in villages along the lakeside can vary. Some people are in favour of protecting the enterprise on economic grounds; but there are also those who believe that gold mining at the mine negatively affects the ecology of the southern shore of Issyk-Kul. This point of view is also shared by the inhabitants of the village of Saruu, 40km from Barskoon.

In Saruu, Kumtor has repeatedly caused discontent among local residents. From 2013 to 2014, Saruu residents participated in rallies including in Karakol, a nearby town, and the capital Bishkek. Protesters set up roadblocks and, on one occasion, managed to enter a local power station and briefly cut off the electricity supply to the mine. Their main demands were an increase in social assistance and the nationalisation of the gold mine. A court later sentenced eight protesters to prison, despite claims that they had been tortured in custody.

Today, about 6,000 people live in Saruu. Small one-storey houses stand in a row along the road, cars rushing past them at high speed. Cattle graze on the side. Children run across the road from time to time, chasing one another.

Under the scorching sun, a man is standing near a tyre repair station. This is 56-year-old Kubanychbek. He watches intently as his children ride their bicycles on the road. A musicologist by profession, Kubanychbek has lived in Saruu all his life.

According to Kubanychbek, the majority of villagers have negative views on the Kumtor mine, which, he believes, has had little positive effect on Kyrgyzstan’s prosperity.

This year there is no harvest due to the almost complete absence of irrigation water, although there used to be a lot of it,” says Kubanychbek.

“Fields are catching fire. Apparently, soon we will have to fight for water. My friend raised this issue under the old president, Atambayev, and we went to rallies. But the Kumtor leadership and our government worked against the people. And now we ourselves must somehow sort out the problems that they have created.”

“If I dig potatoes in someone else’s garden, then I must somehow thank the owner of this garden. It’s the same with Kumtor: if they are in our territory, they should help people living here, especially in terms of social assistance. We have broken roads, bad hospitals. But they were not interested in this. Yes, several thousand people work there, but what is more important: saving the environment or an enterprise that destroys this same environment?”

Closing time?

 

According to Kaliya Moldogazieva, an ecological expert who also served on two state commissions on Kumtor in 2005 and 2012, the mine does have an unwelcome effect on villages located along Issyk-Kul due to the open-cast method of mining.

“Every day 17 tonnes of explosives are used in mine blasting. The dust from the ore is deposited on nearby glaciers and, possibly, covers the villages. There are certainly deviations from the norm. But research on air quality in this area has not yet been carried out. Another source of air emissions is road dust on the operations road. It needs to be repaired regularly, the coating must be changed, but no one does this. Most likely, all this put together affects the life and health of local residents,” Moldogazieva told openDemocracy.

On a national scale, Kumtor carries even more risks, said Moldogazieva. The Petrov lake, which is constantly growing due to the intense melting of a glacier by the same name, could overflow. If that happens, then the dam located below the tailings site, which stores more than 90 million cubic metres of chemical waste left after extracting gold from ore, could burst. In the worst case scenario, the leak would lead to groundwater pollution, and tonnes of toxic substances could enter the Naryn River.

“In the case of Kumtor, the anthropogenic impact has been superimposed on global climate change,” said Moldogazieva. “In addition to the Davydov and Lysy glaciers, the Petrov, Bordeaux and Sary-Tor glaciers are located in the immediate vicinity. It is possible that the melting of these glaciers may accelerate. In addition, the production processes at the mine can create unexpected natural phenomena, such as mudflows, floods, avalanches and landslides.”

Moldogazieva continued: “it is not known what the environmental policy will be under the new [state] control at the mine and whether production standards will be followed. The only way to minimise all risks is to reclaim and close the mine as soon as possible.”

The authorities are not planning on closing Kumtor any time soon. In fact, the government of Kyrgyzstan is interested in extending the mine’s operation as far as possible, according to Dinara Kutmanova, chair of the State Committee for Ecology and Climate. A trained ecologist, Kutmanova was previously a leading member of the Kumtor state commission from 2012 to 2013.

“To dig a pit on such a huge scale and then give up development halfway through is not a smart approach,” Kutmanova told openDemocracy. “Since we have begun to develop the field, we need to use all available resources as efficiently as possible. Thanks to exploration work, the life of the mine will be extended until at least 2031. The main thing is that the development is not accompanied by violation of environmental standards and requirements.”

According to Kutmanova, future operations at Kumtor will be organised according to Kyrgyzstan’s environmental legislation, but she gave no specific timeline. It seems Kumtor will remain an open-cast rather than underground mine for the time being.

“The method of mine development will remain open-cast, although back in 2008 the company should have switched to underground mining,” Kutmanova said, noting that Centerra tested underground mining at a cost of $180m, but then ended the tests on the grounds that it was not profitable. “As a result, the company opted to destroy the glaciers,” she said.

“An action plan for environmental protection is being developed, and it must be implemented without fail. Measures will be taken to gradually switch to underground mining. In addition, the issue of the possibility of using technologies to extract 106 tonnes of gold from tailings is being considered. This requires time and financial resources, so the mine must operate smoothly,” Kutmanova assured.

Whether the Kyrgyzstani state can manage the country’s largest gold mining enterprise transparently and efficiently is a question that remains open. In the meantime, this much is clear: Kumtor has been operating for 30 years, but despite the promises of previous governments, has not become a panacea for poverty in Kyrgyzstan. We don’t know how the country could have developed differently if the mine had never come online, but many are confident that Kyrgyzstan could survive without Kumtor.

Source: opendemocracy.net

 

 

The future of Kyrgyzstan’s Kumtor mine and its environment

Exploration of the Kumtor deposit was done in the late 1970s when Kyrgyzstan was a Soviet republic. It was clear there was a large amount of gold there. But Soviet planners deemed it too expensive to develop such a high-elevation gold field in the poorly connected north eastern part of what was then the Soviet republic of Kyrgyzia. Still, the Soviet Geology Ministry continued the surveying work at the Kumtor deposit, leaving behind detailed records of the riches found there. When the Soviet Union collapsed in late 1991, several foreign firms showed interest in the site.

Bishkek chose a Canadian company called Cameco and in December 1992, the two parties signed the Kumtor Master Agreement in Toronto. In 1993, the Kumtor Operating Company was established to run the Kumtor Gold Company (KGC) — a wholly owned subsidiary of Cameco Gold International. At the time, gold reserves were estimated to be some 514 tons. Subsequent surveys showed there was more. It was a great moment for Kyrgyzstan. Bishkek had a large Western partner to help implement a potentially lucrative project.

Bishkek’s partnerships with Canadian firms at the Kumtor gold mine have been contentious since operations began there in 1997. In recent weeks, the relationship with its current partner — Centerra Gold — has deteriorated into a showdown. Kyrgyz authorities have moved to take far greater control over operations — arguing the move is temporarily necessary because of environmental damage there. Centerra has responded by preparing a legal case to fend off the fresh challenges over ownership.

Glaciers near the Kumtor site are at the heart of the environmental concerns.

The lake and the environment

 

The open-pit gold mine is located in mountains towering above the south shore of a massive lake in Kyrgyzstan — Issyk-Kul. Extraction work is being done at elevations of 3,600 to 4,000 meters above sea level.

While neighboring Kazakhstan, Turkmenistan, and Uzbekistan were waiting for foreign firms to start operations on hydrocarbon fields that required years of preparation, Kyrgyzstan was looking at a relatively quick source of income.

The state gold company Kyrgyzaltyn reported that gold production in the country during 1996 was around 1.5 tons. In 1997, the year that mining operations began at Kumtor, output increased to about 17 tons. Kyrgyzstan also cut its trade deficit by more than 60 percent in 1997 and industrial output increased by almost 50 percent. The country’s currency — the som — was the most stable currency in the Commonwealth of Independent States (CIS).

Kumtor funded construction of schools and other public facilities. The road linking Bishkek to the mining site was repaired. The mine itself employed several thousand local workers, as well as work for thousands more across Kyrgyzstan who produced goods and supplies for the venture. It appeared that the good times were just beginning. But the global market price of gold decreased dramatically, falling from about $590 per ounce in January 1997 to $477 by the end of the year. Then, in 1998, there was an environmental accident at Kumtor.

A mining truck traveling to the Kumtor site overturned on the mountain road, spilling nearly two tons of sodium cyanide into the small Barskoon River — the source of water for all the nearby villages in the lower elevations. Hundreds of villagers became ill. Several died. Thousands needed to be temporarily evacuated. Making matters worse, the Barskoon River emptied the toxic mining chemicals into Kyrgyzstan’s premier tourist area of Issyk-Kul. Business on the north shore of the massive lake, more than 50 kilometers across the waters, dropped by more than 50 percent. A dispute broke out about who was responsible for compensation.

The Kyrgyz government thought Cameco should pay all of it. But Cameco argued that it had only a one-third stake in the project and should only be responsible for one-third of the compensation. Cameco eventually agreed to a settlement of $4.6 million. Some of that never reached the people affected by the tragedy The driver of the truck that overturned was the only person convicted of any crime. Kyrgyzstan’s parliament voted to revise the contract with Cameco.

By then, there were already questions about how much money Kyrgyzstan was actually receiving from the project.

The Barskoon tragedy raised further questions about how closely Kumtor was following its commitments on environmental protection.

As an open-pit mine, explosives are used at Kumtor to blast out the mountain — moving down through ice and earth in search of gold. Waste from blasting was supposed to be trucked away. But with the approval of Kyrgyz authorities, some was simply moved and dumped onto the nearby Davidov and Lysiy glaciers. Over the years, that practice has eroded the glaciers. In 2003, the Kyrgyz government formed a special commission to revise the contract with Cameco. By that time, the members of the commission were aware that Cameco was in talks to sell off its Kumtor assets to another Canadian firm — Centerra Gold. Cameco had a 33 percent stake in Kumtor. The state-owned Kyrgyzaltyn held all of the remaining 67 percent stake.

In 2004, after the Kyrgyz government commission moved to decrease Kyrgyzstan’s stake in Kumtor to 33 percent, a new agreement was reached. It allowed Centerra to acquire stakes in the Kumtor mine from both Cameco and Kyrgyzaltyn in exchange for shares in Centerra. The deal left Kyrgyzaltyn with a 33 percent stake in the Kumtor mine. Cameco divested its remaining Centerra holdings in 2009. The same year, Bishkek reached a new agreement with Centerra. It allowed the Kumtor operation to dump the waste from the mine on the glaciers. That spawned protests in Bishkek against the environmental damage from mining. Roads leading to the mine also were sometimes blocked by crowds demanding that Kumtor be nationalized.

Two lawmakers at the time who backed nationalization included Kyrgyzstan’s current president, Sadyr Japarov, and Kamchybek Tashiev, who now heads the State Committee for National Security. Kyrgyzstan’s share in Kumtor has dwindled to 26 percent. Some analysts predicted when Japarov was elected president in January that he would move against Kumtor. Now he has.

External Management

 

On May 7, Kyrgyzstan’s parliament approved a bill to impose temporary external management over Kumtor. Technically, the bill addresses all organizations with concession agreements in Kyrgyzstan.

But Akylbek Japarov, a lawmaker leading the move against Centerra who has no relation to the president, admitted after the vote that there is only one such enterprise operating in the country.

On May 8, the Oktyabr district court in Bishkek ordered the Kumtor Gold Company to pay about $3.2 million for environmental damage to the Davidov and Lysiy glaciers and for accidents at the site that killed several workers. That court ruling satisfied the demands of the four activists who filed the complaint in the case: Aibek Sarybaev, Naris Kalchaev, Albas Jeenbenkov, and Kemelbek Kutmanov. Notably, Kutmanov is the son of the chair of Kyrgyzstan’s State Committee for Ecology and Climate, Dinara Kutmanova. The Kyrgyz government also claims Kumtor owes $170 million in unpaid taxes. Centerra says all these claims against the Kumtor mine are without merit.

The Canadian mining firm says it has “initiated binding arbitration against the Government of the Kyrgyz Republic to enforce its rights under longstanding investment agreements with the Government.”

Centerra also says it will “hold the Government accountable in the arbitration for any and all losses and damage that result from its recent actions against KGC and the Kumtor Mine if no resolution is reached.”

Analysts say the abrupt moves by the Kyrgyz government stand little chance of holding up in arbitration. But some speculate that the government is simply maneuvering to increase its stake in Kumtor.

Akylbek Japarov was a member of the 2003 commission that moved to reduce Kyrgyzstan’s share holding. On May 19, he said the Kyrgyz government would demand that its stake be raised to 51 percent of the shares in Centerra.

Source: rferl.org

 

 

Kyrgyz gold mining at heart of recent political turmoil

The gold mine, in the Jalal-Abad region of western Kyrgyzstan located in the Chatkal district, is owned by Full Gold Mining – a company founded by Chinese state-owned enterprise Lingbao Gold.

On October 19, 2020, a large fire engulfed buildings at this gold mine. As the authorities checked the site for compliance with safety regulations, rumours started that cyanide and other chemicals were burning, and that the fire was the result of arson. The Kyrgyz emergency services rejected this, reporting that welding work had started the blaze. This was only the second incident at the Ishtamberdy deposit that month.

Earlier in October, there were reports that the mine had been seized by 300-400 local people, with Chinese workers forced to flee from the site. Unrest over the recent annulment of election results fused with existing frustrations with international mining companies, sparking violent protests at gold mines across Kyrgyzstan in early October. The Third Pole contacted local residents who witnessed the protests at the Ishtamberdy mine. Most refused to answer The Third Pole’s questions, stating that law enforcement agencies had told them not to communicate with journalists.

One resident of Kanysh-Kya, a village in Chatkal district, did comment on the unrest. The region’s residents, he said, “are concerned about environmental pollution from the mining industry, where primarily Chinese companies are investing”. He described the Chanach mine, where he claimed in order to extract 24 kilogrammes of gold, 71 hectares of forest was destroyed. “Nobody even thought to restore the lost vegetation,” he said, adding that “the local population is dissatisfied with such an attitude towards nature.” “This dangerous activity must be stopped,” said the villager.

Long history of tension

 

Talantbek Mamsadikov, head of the regional government’s industry, construction and communication sector for Jalal-Abad, said that a number of companies owned by foreign investors are active in the region, but that the most successful of these is Full Gold Mining.

Full Gold Mining started to operate in Kyrgyzstan in 2008 after an agreement between China and Kyrgyzstan, which was later incorporated into China’s Belt and Road Initiative (BRI). The Chinese company reconstructed parts of a highway between the city of Osh in southern Kyrgyzstan and Erkeshtam, a border crossing between Xinjiang and Kyrgyzstan. In exchange, Full Gold Mining received the rights to develop the Ishtamberdy deposit in Jalal-Abad. Since then, there have been numerous controversies around the company. In 2011, the foreign investor had to suspend work due to locals blocking the road, protesting against the alleged use of cyanide to extract the gold. At the beginning of 2018, the company fired 370 Kyrgyz employees after they reportedly refused amendments to their contracts that would have lowered their salaries and working conditions. Chi Shuan Tan, the vice-president of Full Gold Mining at the time, announced during a meeting with Kyrgyz officials that “the investment hasn’t paid off yet, and in order to not go bankrupt we have to resort to such steps.”

Anger at pollution

 

“Locals used to freely move their animals out to pasture, but with the activities of gold mining companies this has become impossible,” said Kamchibek Kambarbekov, regional correspondent of the state-run regional media centre in the Jalal-Abad region. “Not only is mountain terrain being destroyed, but the course of rivers is being changed, dust is rising, and familiar trails and roads are disappearing. Close to the Ishtamberdy deposit, springs have stopped flowing, and shepherds are having trouble getting their cattle to drink. Due to explosion works, plants, animals, birds and even mountains are disappearing.”

Elena Ivanova, a human rights activist from the Jalal-Abad region, told The Third Pole about a event in February 2020 when villagers stopped two trucks in the middle of the night and discovered they were carrying chemical waste.

“The investors were dumping poisonous waste in inappropriate places,” she said. “These chemicals drift into the Terek-Sai River, and from there into the Kasansaisky reservoir, killing everything. Locals who use the river water have allergic reactions and rashes, and it poses a danger to populations downstream.”

The actions by the villagers, Ivanova said, led to a criminal case, demonstrating that the company broke laws related to the transport of dangerous cargo and waste. In 2019, following a planned government audit, Full Gold Mining was fined for violating environmental requirements. The amount of the claim was KGS 561,795 (USD 6,630) and a fine was issued for KGS 45,000 (USD 530).

Ivanova said that there has been no positive result of complaints from locals about Full Gold Mining’s activities, as the company can easily pay such fines without resolving the underlying issues. The Third Pole raised these issues with Ermek Tolobaev, regional head for Chatkal, Ala-Bukin and Aksy districts at the State Inspection for Environmental and Technical Safety. Tolobaev said that mining companies do not have a negative environmental impact, apart from a few minor shortcomings which are being addressed.

Tolubaev said that contrary to locals’ claims that the chemicals are used to extract gold at the Ishtamberdy deposit are dangerous, analysis at the Kyrgyz National Academy of Science has found that they do not present a risk to the environment.

Suspicion and secrecy

 

Aidanbek Akmatov, a Biskhek-based political analyst, said that the Ishtamberdy deposit contains around 80 tonnes of gold.

Akmatov stated that the Kyrgyz economy does not benefit sufficiently from the gold mining companies – recommending that Kyrgyzstan receive at least 50% of the profits. But as things stand, he said, Kyrgyzstan’s high national debt means “the population is worried that China may take our lands as payment”.

Mamsadikov said, “The activity of [Full Gold Mining] in our region has been successful. We’re interested in them – they bring benefits to our economy. And we believe that our state will always be able to provide them with a guarantee of safety.”

Akmatov also said that the Kyrgyz population are unhappy with Chinese investors in mining companies due to the fact that the granting of deposits is often not transparent.

Gamal Sooronkulov, ecologist and former head of environmental security for the Jalal-Abad region, echoed this. Sooronkulov said that more attention to environmental safety is needed at the permission stage of gold mining projects. Local authorities should also consult residents before licences are granted for infrastructure, Sooronkulov said.

“I believe that the Kyrgyz Republic’s law ‘On Minerals’ needs to be re-evaluated, and that a point needs to be added there that discusses the mandatory inclusion of representatives of the local population. Otherwise, there’s a triangle of the mining companies, authorities and locals which will never come to a consensus.”

The Third Pole asked Lingbao Gold to comment on the issues raised. This article will be updated if a response is received.

New president and maybe new policies?

 

In January 2021, following the popular rising over the October election, Sadyr Japarov became president. Japarov has frequently deplored the exploitation of Kyrgyz natural resources by foreign corporations. What does his election mean for possibility of nationalising the country’s gold mines?

“Japarov has not yet openly expressed himself about the future work of companies engaged in the mining industry, including Chinese,” said Akmatov. “No matter what happens, this will not affect the Russian companies engaged in mining… I think that is because of fears he will not go against the interests of Russia… We are watching how geopolitical forces, the United States, Europe and Russia, are opposed to the work of the Chinese companies. At the same time, the factor of raising the economy of the Kyrgyz Republic is very important for Sadyr Japarov. And in this he places a big stake on the mining industry.”

Ivanova, the human rights activist, said that residents of villages where the mining companies operate hope very much that Japarov will tackle environmental problems.

“The people supported him for a reason,” she said. “After all, he himself admitted that the Kyrgyz people suffered for 30 years. Investors not only upset the balance with nature, but also ignore local residents, then they do not reckon with them, and do not discuss the current situation. Since the companies are so bad about the environment, protests are likely to continue [if nothing changes].”

So far, the status quo is unchanged: on January 23 2021 an environmental spill at a gold ore field in Jalal-Abad region washed 30 cubic metres of industrial waste into the Terek-Sai river. The project is operated by Eti Bakir Tereksay, a Turkish-Kyrgyz joint venture.

“The state needs to strengthen control, and even better to tighten conditions for foreign investors. And at the same time, it is necessary to increase the state’s share of these companies, which can only cause a positive reaction from the local population,” said Akmatov.

Source: thethirdpole.net

 

Political influence on Kyrgyz gold mining

The gold mine, located in the Chatkal district of the Jalal-Abad region, is owned by Full Gold Mining – a company founded by Chinese state-owned enterprise Lingbao Gold. In October 2020, a large fire engulfed buildings at this gold mine. As the authorities checked the site for compliance with safety regulations, rumours started that cyanide and other chemicals were burning, and that the fire was the result of arson. The Kyrgyz emergency services rejected this, reporting that welding work had started the blaze. This was only the second incident at the Ishtamberdy deposit that month. Earlier in October, there were reports that the mine had been seized by 300-400 local people, with Chinese workers forced to flee from the site. Unrest over the recent annulment of election results fused with existing frustrations with international mining companies, sparking violent protests at gold mines across Kyrgyzstan in early October.

The Third Pole contacted local residents who witnessed the protests at the Ishtamberdy mine. Most refused to answer The Third Pole’s questions, stating that law enforcement agencies had told them not to communicate with journalists. One resident of Kanysh-Kya, a village in Chatkal district, did comment on the unrest. The region’s residents, he said, “are concerned about environmental pollution from the mining industry, where primarily Chinese companies are investing”. He described the Chanach mine, where he claimed in order to extract 24 kilogrammes of gold, 71 hectares of forest was destroyed. “Nobody even thought to restore the lost vegetation,” he said, adding that “the local population is dissatisfied with such an attitude towards nature.” “This dangerous activity must be stopped,” said the villager.

Long history of tension

 

Talantbek Mamsadikov, head of the regional government’s industry, construction and communication sector for Jalal-Abad, said that a number of companies owned by foreign investors are active in the region, but that the most successful of these is Full Gold Mining. Full Gold Mining started to operate in Kyrgyzstan in 2008 after an agreement between China and Kyrgyzstan, which was later incorporated into China’s Belt and Road Initiative (BRI). The Chinese company reconstructed parts of a highway between the city of Osh in southern Kyrgyzstan and Erkeshtam, a border crossing between Xinjiang and Kyrgyzstan. In exchange, Full Gold Mining received the rights to develop the Ishtamberdy deposit in Jalal-Abad. Since then, there have been numerous controversies around the company. In 2011, the foreign investor had to suspend work due to locals blocking the road, protesting against the alleged use of cyanide to extract the gold. At the beginning of 2018, the company fired 370 Kyrgyz employees after they reportedly refused amendments to their contracts that would have lowered their salaries and working conditions. Chi Shuan Tan, the vice-president of Full Gold Mining at the time, announced during a meeting with Kyrgyz officials that “the investment hasn’t paid off yet, and in order to not go bankrupt we have to resort to such steps.”

Anger at pollution

 

“Locals used to freely move their animals out to pasture, but with the activities of gold mining companies this has become impossible,” said Kamchibek Kambarbekov, regional correspondent of the state-run regional media centre in the Jalal-Abad region. “Not only is mountain terrain being destroyed, but the course of rivers is being changed, dust is rising, and familiar trails and roads are disappearing. Close to the Ishtamberdy deposit, springs have stopped flowing, and shepherds are having trouble getting their cattle to drink. Due to explosion works, plants, animals, birds and even mountains are disappearing.”

Elena Ivanova, a human rights activist from the Jalal-Abad region, told The Third Pole about a event in February 2020 when villagers stopped two trucks in the middle of the night and discovered they were carrying chemical waste.

“The investors were dumping poisonous waste in inappropriate places,” she said. “These chemicals drift into the Terek-Sai River, and from there into the Kasansaisky reservoir, killing everything. Locals who use the river water have allergic reactions and rashes, and it poses a danger to populations downstream.”

The actions by the villagers, Ivanova said, led to a criminal case, demonstrating that the company broke laws related to the transport of dangerous cargo and waste. In 2019, following a planned government audit, Full Gold Mining was fined for violating environmental requirements. The amount of the claim was KGS 561,795 (USD 6,630) and a fine was issued for KGS 45,000 (USD 530). Ivanova said that there has been no positive result of complaints from locals about Full Gold Mining’s activities, as the company can easily pay such fines without resolving the underlying issues. The Third Pole raised these issues with Ermek Tolobaev, regional head for Chatkal, Ala-Bukin and Aksy districts at the State Inspection for Environmental and Technical Safety. Tolobaev said that mining companies do not have a negative environmental impact, apart from a few minor shortcomings which are being addressed. Tolubaev said that contrary to locals’ claims that the chemicals are used to extract gold at the Ishtamberdy deposit are dangerous, analysis at the Kyrgyz National Academy of Science has found that they do not present a risk to the environment.

Suspicion and secrecy

 

Aidanbek Akmatov, a Biskhek-based political analyst, said that the Ishtamberdy deposit contains around 80 tonnes of gold. Akmatov stated that the Kyrgyz economy does not benefit sufficiently from the gold mining companies – recommending that Kyrgyzstan receive at least 50% of the profits. But as things stand, he said, Kyrgyzstan’s high national debt means “the population is worried that China may take our lands as payment”.

Mamsadikov said, “The activity of [Full Gold Mining] in our region has been successful. We’re interested in them – they bring benefits to our economy. And we believe that our state will always be able to provide them with a guarantee of safety.”

Akmatov also said that the Kyrgyz population are unhappy with Chinese investors in mining companies due to the fact that the granting of deposits is often not transparent. Gamal Sooronkulov, ecologist and former head of environmental security for the Jalal-Abad region, echoed this. Sooronkulov said that more attention to environmental safety is needed at the permission stage of gold mining projects. Local authorities should also consult residents before licences are granted for infrastructure, Sooronkulov said.

“I believe that the Kyrgyz Republic’s law ‘On Minerals’ needs to be re-evaluated, and that a point needs to be added there that discusses the mandatory inclusion of representatives of the local population. Otherwise, there’s a triangle of the mining companies, authorities and locals which will never come to a consensus.”

The Third Pole asked Lingbao Gold to comment on the issues raised. This article will be updated if a response is received.

New president and maybe new policies?

 

In January 2021, following the popular rising over the October election, Sadyr Japarov became president. Japarov has frequently deplored the exploitation of Kyrgyz natural resources by foreign corporations. What does his election mean for possibility of nationalising the country’s gold mines?

“Japarov has not yet openly expressed himself about the future work of companies engaged in the mining industry, including Chinese,” said Akmatov. “No matter what happens, this will not affect the Russian companies engaged in mining… I think that is because of fears he will not go against the interests of Russia… We are watching how geopolitical forces, the United States, Europe and Russia, are opposed to the work of the Chinese companies. At the same time, the factor of raising the economy of the Kyrgyz Republic is very important for Sadyr Japarov. And in this he places a big stake on the mining industry.”

Ivanova, the human rights activist, said that residents of villages where the mining companies operate hope very much that Japarov will tackle environmental problems.

“The people supported him for a reason,” she said. “After all, he himself admitted that the Kyrgyz people suffered for 30 years. Investors not only upset the balance with nature, but also ignore local residents, then they do not reckon with them, and do not discuss the current situation. Since the companies are so bad about the environment, protests are likely to continue [if nothing changes].”

So far, the status quo is unchanged: on January 23 2021 an environmental spill at a gold ore field in Jalal-Abad region washed 30 cubic metres of industrial waste into the Terek-Sai river. The project is operated by Eti Bakir Tereksay, a Turkish-Kyrgyz joint venture.

“The state needs to strengthen control, and even better to tighten conditions for foreign investors. And at the same time, it is necessary to increase the state’s share of these companies, which can only cause a positive reaction from the local population,” said Akmatov.

Source: thethirdpole.net

 

Kyrgyz’ mining sector faces turbulences

For now, Kyrgyz mining companies are still recovering from the mayhem that ensued following weeks of unrest that stemmed from protests against the October 4 parliamentary election.

Kyrgyzstan’s latest bout of political turbulence halted operations at a number of mining companies as mobs took advantage of the lawlessness to raid their projects. The next risk the miners may be facing are regulatory as authorities mull tapping them for funds with which to close the yawning budget deficit.

A subsidiary of Russian Platinum, which operates the country’s second-largest gold mine, Jerooy, has claimed damages of $15 million – the result of an assault apparently mounted by residents of nearby villages on October 6. The operator of Kyrgyzstan’s largest mine, Kumtor, was spared the kind of unrest that brought at least eight mines grinding to a halt.

But the general mood of uncertainty has seen the stock of its operator, Centerra Gold, tumble by 18 percent since the crisis began. The Kyrgyz government holds around 26 percent of the company’s shares. It was mainly promising, second-tier mines, such as Jerooy in the northwestern region of Talas and the Ishtamberdi, Bozumchak and Terek-Sai mines in the southern Jalal-Abad region, that were targeted during the chaos.

Jerooy and Terek-Sai were both at critical stages in their project cycles. Jerooy was expected to enter production of gold this year, while Terek-Sai’s Turkish operators were building a plant to recover gold and silver from ore.   The International Business Council lobbying group said on November 3 that it estimates that the state is losing $50,000 for every day that the mines stand idle. It is as yet unclear if any of the mines have resumed operations.  There is also an awkward diplomatic angle to this situation. Ishtamberdi is Chinese-operated and Bozymchak is run by Kazakh copper giant Kazakhmys. Both countries are important partners for Kyrgyzstan. The government says it wants to get the sector up and running as soon as possible. But the biography of the new prime minister and acting president, Sadyr Japarov, is not reassuring. Japarov’s political brand is built to a major extent of nationalist appeals against miners like the one operating Kumtor. He has softened his stance since taking power, though. On October 23, he pledged to defend investors after saying before that that he has no plans to seek ownership restructure of Kumtor. At the same time, he has shied away from criticizing the crowds that attacked the mines last month. Those incidents happened because of “a reluctance by companies to cooperate with the local population, as well as non-compliance with international requirements on environmental issues in the region,” Japarov said.  During a tour of the south this week, Japarov visited Bozymchak and Terek-Sai. He met with local officials, residents and company representatives.

At Terek-Sai, in which the government controls a 25 percent stake, Japarov called for the community to play a greater role overseeing the project’s social and environmental obligations.  As for Bozymchak, he asked nearby residents not to blame Kazakhmys for any shortcomings. All the blame lay with the previous government, he said, omitting to detail how his administration will tackle outstanding issues.  If Japarov has tried to sound a reassuring note, more worrying noises for miners are coming from regulators. Jyrgalbek Sagynbayev, the newly appointed head of the state committee for subsoil use, said on November 2 that the government was working on new legislation to impose new requirements on miners.  One could see the companies obliged to ensure 90 percent of its employees are local hires, Sagynbayev said. Another would mandate that miners source more goods from Kyrgyz companies. A mooted plan to proscribe the export of unprocessed ore would force companies to build in-country processing facilities. That requirement would imply a windfall of investment and generate many jobs, but it could also pose fresh environmental risks.

This regulation would impact Kazakhmys and some Chinese companies that take ore over their respective borders with Kyrgyzstan.  Ideas like these have been raised in the past only to be shot down for being impractical. According to lawmaker Dastan Bekeshev, who claimed familiarity with legislation under development, what Sagynbayev has spoken about is just the tip of the iceberg. Government is seeking a permanent stake in all mining projects as well as undefined “historical payments,” he wrote in a November 3 tweet.

“We had better get the chains ready or else [the investors] might run away,” he joked.

Source: eurasianet.org