An industry survey has called Kyrgyzstan one of the world's “least attractive” places for mining companies to invest. In one category, Kyrgyzstan, which is embroiled in a contract dispute with its largest foreign investor, ranked last for "uncertainty concerning the administration, interpretation and enforcement of existing regulations.”
The survey, released February 28 by the Fraser Institute, a non-profit Canadian research outfit, is based on interviews with representatives of 742 mining companies working in 96 jurisdictions (countries, states, provinces) who spent a total of $6.2 billion in exploration worldwide last year.
Fraser uses something called the Policy Potential Index (PPI), “a comprehensive assessment of the attractiveness of mining policies in a jurisdiction, [which] can serve as a report card to governments on how attractive their policies are from the point of view of an exploration manager.”
Overall, Kyrgyzstan ranked 92nd of 96.
Miners answered questions about topics like environmental and tax regulations, land disputes, “socioeconomic agreements, political stability, labor issues” and security. Corruption (where Kyrgyzstan also plumbed the bottom of the rankings) was surveyed but not factored into the PPI.
Kyrgyzstan fared slightly better in “potential” and quite high in “room for improvement.”
The country’s reputation among investors has taken a beating since February 2012, when several lawmakers began pushing to nationalize the country’s flagship development, the Kumtor gold mine, which is owned by Toronto-based Centerra Gold (which is one-third owned by Bishkek). Parliament last month gave the government three months to reach new terms with Centerra, threatening otherwise to cancel unilaterally the existing agreement. This is the fourth negotiation between the government and the Canadians since Kumtor was first developed in the early 1990s.
Other investors seem to be taking a wait-and-see approach while the drama plays out. A delegation of Austrian businessmen visiting Kyrgyzstan this week was less than enthusiastic about the country, KyrTAG reported.
The report didn’t offer a lot of qualitative feedback specifically on Kyrgyzstan, except for two quotes from presidents of exploration companies operating there. Neither had anything nice to say. One summarized the country thus: “Corrupt, inconsistent and random policy changes.”