A week-old strike at Kyrgyzstan’s largest gold mine is costing Bishkek approximately $380,000 per day, according to the Vechernii Bishkek newspaper. Judging by a brief slowdown last year, the walkout could sharply affect growth forecasts.
Workers at the Kumtor Gold Mine, which accounts for nearly 12 percent of the impoverished nation’s GDP and 54 percent of industrial output, laid down their tools on February 7, demanding parent company Centerra Gold pay the state’s recently introduced social security deductions, rather than see them withheld from their salaries.
Centerra, which is one-third controlled by the government and listed on the Toronto Stock Exchange, believes the strike is illegal because it violates a collective agreement with workers, Reuters reported on February 7. Centerra’s Kumtor Operating Company said that no other company in Kyrgyzstan was paying the mandatory contribution on behalf of its employees.
Bishkek’s KyrTAG news agency reports that six-hour talks between union representatives and Centerra on February 10 failed to reach any consensus.
Two studies released last month found that Kumtor, which has been repeatedly accused of polluting in Issyk-Kul Province, routinely ignores national environmental legislation and restricts access to independent auditors. One independent report said Kumtor is “releasing numerous chemical constituents into the environment,” affecting fish populations downstream and locals’ health.
Kumtor is the target of regular protests from locals demanding a bigger share of proceeds be invested locally. Most recently, in late November villagers in Balykchy, several hours from the mine, blocked the only road to the site for a week. The roadblock, though brief, resulted in an abrupt drop in the mine's production. According to the National Statistics Committee, the slowdown was significant enough to drive down the country's year-on-year GDP growth from 8.5 percent for the first 11 months of the year to 5.7 percent by year's end. “The slowdown in the economic growth rate was caused by an abrupt drop in production volume at enterprises developing the Kumtor deposit in December of last year,” said the Committee’s January report summing up results for 2011.