Kyrgyzstan’s gold sector has been running into problem upon problem lately. Just this year at least one major foreign-run operation had its license suspended, another was slapped with a $5 million fine, and a third had its exploratory camp burned down by marauding horsemen.
Now gold producers will be forbidden from shipping gold ore out of Kyrgyzstan, according to a report by the KyrTAG news agency. Starting next year, gold is only to be processed in-country, an official from the Ministry of Economic Regulation says. Exporters of gold concentrate, a purer mix than ore, will have to pay an extra tax before taking the material out.
Kyrgyzstan doesn’t have the facilities to process gold, admits the head of the ministry’s Department for Large Businesses, Emil Orozbekov. But how are investors supposed to read this? Should they start building processing facilities? Or give up?
"Some companies export gold ore and concentrates to process them in other countries, for example Kazakhstan and Russia. Kyrgyzstan has imposed a ban on the export of ore and increased export duties for gold concentrates from 2012," Orozbekov said. Kyrgyzstan does not have the experience processing ore and concentrates, “that is why many businessmen take the raw material abroad. In this way, we lose profits from the added value," he continued.
The late August 19 story raises more questions than it provides answers for. But as EurasiaNet.org reported earlier this year, international investors might start looking elsewhere should the going in Kyrgyzstan keep getting tougher.
Over 100 companies work in Kyrgyzstan’s gold-extraction sector, the report added. The largest mine, Canadian-operated Kumtor, produces roughly 7 percent of Kyrgyzstan’s GDP.
David Trilling is Eurasianet’s managing editor.
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