Tourists associate Kyrgyzstan’s Lake Issyk-Kul with beaches, children hawking boiled corn, and a welcome reprieve from the sweltering summers that plague most of Central Asia. But for the residents of Kadji Sai on the lake’s southern shore, the summer tourist influx is only a distraction from the trouble looming, literally, right over them: a derelict Soviet-era uranium mine.
Just uphill, the mine and uranium-processing mill were the original rationale for the settlement. But they closed when the Soviet Union collapsed in the early 1990s. In recent years, the site has become a source of radiation-related concerns. When heavy rains hit the area, the uranium tailings – buried between two creek beds – are frequently covered in water; the overflow drains through the village and into Issyk-Kul.
On a recent visit, one resident expressed the frustration that many of his neighbors share: “Everything was just left here. People that could leave, did. But for those of us who stay here and who have families here, what can we do? It seems like everyone wants to come to Kyrgyzstan and make mines but how do we live with [the mines] once they’re finished?”
As foreign donors, government agencies and NGOs spend time and money discussing the cleanup, local officials are often reduced to hand wringing, begging someone to do something. In the case of Kadji Sai, local authorities say they are unable even to afford guards to keep scavengers from looting the little valuable equipment and infrastructure that remains.
Kyrgyzstan's massive loss at an arbitration court this month has encouraged speculation that the country's only significant foreign asset – its stake in a Canadian gold mining company – is up for grabs.
On July 2, a tribunal in Moscow awarded Toronto-listed Stans Energy Corp $118.2 million in damages in a dispute over the Kutessay-II heavy rare earth elements mine in Kyrgyzstan’s Talas Province. Stans acquired a 20-year license to the mine in 2009, which the Kyrgyz parliament recommended the government annul in 2012. (Stans has alleged that powerful Chinese interests in Kyrgyzstan bribed parliamentarians to revoke the license in order to help Beijing maintain control over the lucrative rare earths market.)
Canada’s National Post reports that Stans has few options because Kyrgyzstan, one of the poorest countries in Asia, does not have that kind of cash lying about. So Stans could seek to seize Kyrgyzstan’s shares in Toronto-listed Centerra Gold, which, in turn, owns Kyrgyzstan’s largest industrial asset, the Kumtor Gold Mine. From the National Post’s financial pages:
It is highly unlikely that Kyrgyzstan will respect the ruling and pay out any cash. That leaves Stans the option of securing verdicts against one or more of the state’s foreign assets. And a logical one to go after would be Kyrgyzstan’s 32.7% stake in Centerra, currently worth almost $500 million.
Apple, the beloved maker of addictive gadgets, says it is using gold mined in Uzbekistan, one of the world’s most notorious human rights abusers, in some of its most popular products.
The disclosure follows new American legislation requiring US-listed companies to reveal supply chains to show they are not using "conflict minerals" – tin, tantalum, tungsten and gold – that have helped fund Congo’s never-ending war.
According to Apple’s May 29 Specialized Disclosure Report to the US Securities and Exchange Commission (SEC), last year the California-based company used gold from Uzbekistan's Almalyk Mining and Metallurgical Complex and Navoi Mining & Metallurgy Combinat. Gold from those companies could have ended up in “Apple’s iPhone, iPad, Mac, iPod, Apple TV, displays, and accessories,” the disclosure said.
“The ethical sourcing of minerals is an important part of Apple’s mission to ensure safe and fair working conditions in its supply chain. Apple is determined to use ‘conflict free’ minerals in its products,” Apple said in its SEC filing.
The new SEC reporting requirements affect some 6,000 US-listed companies, Forbes reported last month. The SEC estimates the extra due diligence will cost these companies between $3 and $4 billion this year and $207 to $609 million annually afterward, Forbes said.
Kyrgyzstan’s largest industrial enterprise, the Canadian-operated Kumtor gold mine, says it will stop production next week if the Kyrgyz government does not approve the necessary work permits. The announcement, which sent the company’s stock plummeting to its lowest point this year, comes less than a month after a rancorous board meeting where Kyrgyz representatives complained their Canadian partners ignored their decisive vote on the company’s management structure.
Toronto-listed Centerra Gold, which is one-third owned by Kyrgyzaltyn, the Kyrgyz government’s state-owned gold company, says its has worked since late 2013 to secure the necessary mining and environmental permits and approval of its 2014 action plan.
“Unfortunately, this year, despite repeated submissions and discussions with senior officials, such approvals and permits have not been provided. The continuing absence of such approval and permits creates significant uncertainty and risks for Centerra and its employees,” the company said in a June 2 statement.
Without the permits, Kumtor will begin stopping operations on Friday, June 13. Slowing down or temporarily stopping work at Kumtor negatively impacts revenues for longer than any stoppage, because work can only be gradually resumed at the high-altitude, high-tech mine in Kyrgyzstan’s Tien Shan mountains.
Yesterday's tragic mining accident in western Turkey, which left at least 245 workers dead and more than 100 still trapped, has again put a spotlight on the country's spotty workplace safety record and the halting steps to improve it.
As the Hurriyet Daily News reports, Turkey's mining industry has one of the world's highest fatality rates:
More than 3,000 people have been killed in mining accidents across Turkey since 1941, mostly due to fires, landslide or explosions.
A report from 2010 stated that the number of deaths in mine accidents in Turkey outnumbers those in the world’s biggest coal producers, the Unites States and China, in terms of fatalities per ton.
Figures show the country is much more dangerous than any country for a miner, even than China, which has the largest number of coal-mining fatalities in any country.
Although the number of miners killed in accidents is far higher in China, the number of deaths per ton of coal production in China was seven times lower than Turkey in 2008, according to a mining sector overview report published by the Economy Policy Research Foundation of Turkey (TEPAV) in 2010.
“While the number of deaths per million ton of coal production is 7.22 in Turkey, it stood at 1.27 in China and 0.02 in the United States in the same year,” the report said, citing official data obtained from the country’s related agencies.
Protestors in Kyrgyzstan’s northwest have clashed with police and blocked a major road, alleging a Kazakh project to survey for gold is polluting the local environment. It’s the latest in a string of violent, mining-related clashes in the Central Asian state. Once again, mining experts in Bishkek are skeptical about the protestors’ motivations.
Early on April 3, several hundred protestors blocked the road leading from Talas, the largest town in Kyrgyzstan’s northwestern Talas Province, to Taraz, in Kazakhstan. By evening, the number had swollen to 500 and some reports circulated that two officials had been kidnapped. At least 19 police were wounded in a confrontation with stone-throwing residents, 24.kg reported, citing an Interior Ministry official.
The protestors are demanding Kazakh mining concern Altyn Kumushtak, which has been exploring the Shiraldjin gold deposit since 2005, stop. In an interview with Radio Liberty’s Kyrgyz Service, a self-identified participant in the riots, Nurlan Muzurov, said he and others “don’t want deformed children, pollution of the water and the air.”
In 2009, Altyn Kumushtak’s license had been annulled and given to a Chinese company in one of many murky exchanges during the presidency of Kurmanbek Bakiyev, who was ousted amid bloody street protests in 2010. In 2013 the Kazakh company successfully appealed and won back the rights to the deposit.
Lawmakers may have destroyed Kyrgyzstan’s reputation among investors in the process, but after a year of heated arguments, which often spilled out into the streets, parliament voted to accept a restructuring roadmap with the country’s largest investor on February 6. The arrangement evenly splits control of the Kumtor gold mine between Bishkek and Kumtor’s Canadian owners.
But Kumtor will probably remain divisive. Outside the high-altitude mine in Issyk-Kul Province, villagers have been holding another one of their periodic roadblocks in recent days, demanding concessions from the government and the mine. In a country with widespread unemployment and few opportunities, young men like those blocking the road this week are easily whipped into a fury. Many observers believe they are paid. The ostensible reason for the latest roadblock is the arrest of several local men last August on charges of trying to extort $3 million from the mine.
In the late-afternoon vote on February 6, after weeks of deliberation, 60 deputies voted for the resolution and 35 against. Two abstained and 23 were absent, according to a count published by AKIpress.
Under the agreement, Kyrgyzstan would trade its 33-percent share in Toronto-listed Centerra Gold for a 50-percent interest in a new company that would own and operate Kumtor. In 12 years, Kyrgyzstan would have the opportunity to purchase another 17 percent of the joint venture at market value.
Kyrgyzstan’s government has reached yet another possible restructuring plan with Toronto-listed Centerra Gold, which owns the country’s largest and most profitable mine. But the non-binding agreement must still be ratified by Kyrgyzstan’s self-serving parliament, which rejected a strikingly similar plan in October.
The high-altitude Kumtor gold mine is the largest industrial asset in the impoverished Central Asian nation, account for approximately 12 percent of GDP in a good year and over 50 percent of industrial output.
Restructuring negotiations, which would lead to the fourth operating agreement since Canadian miners started developing the Kumtor deposit in the mid-1990s, began after parliament voted in February to tear up a 2009 agreement, maintaining it was not in the interests of the country. Centerra countered that it has invested approximately $1 billion in the mine since signing that contract. Few believe Kyrgyzstan has the technical know-how to operate the project on its own.
The Kumtor mine has produced over 270 tons of gold since operations began in the mid-1990s.
Kyrgyzstan’s parliament voted overwhelmingly on October 23 not to accept a deal with Canada’s Centerra Gold, leaving the fate of the country’s only significant industrial asset, and the one-year-old government, uncertain yet again.
Eighty-four deputies voted to scrap a September 10 memorandum between the government and the Toronto-listed company that would increase Kyrgyzstan’s stake in the high-altitude Kumtor gold mine from roughly 33 percent to an even 50 percent. Two deputies voted to support the memorandum.
Later in the day, parliament demanded the government negotiate no less than a 67-percent share in the mine. That resolution also instructed the General Prosecutor’s office to open criminal cases connected with earlier iterations of the operating agreement, dating from 2003.
Earlier this year parliament demanded the government renegotiate a 2009 agreement with Centerra. The ongoing negotiations are the fourth since the mine began operations in the mid-1990s, which helps explain why a Canadian think-tank this year ranked Kyrgyzstan the world’s fifth-worst place to invest in mining. The government now has until December 23 to broker a deal. Should the two parties fail to agree, deputies vowed to break unilaterally the 2009 operating agreement. Since Kyrgyzstan does not have the cash to buy Centerra out, that move would likely look a lot like expropriation.
Kyrgyzstan’s largest investor has announced a tentative deal that would end months of gridlock over one of the country’s most valuable assets.
In a statement posted on its website September 9, Toronto-based Centerra Gold said
it had entered a “non-binding memorandum of understanding” with Bishkek that would see the Kyrgyz government trade its 32.7 percent interest in Centerra, plus $100 million in future profits, for a 50 percent stake in a joint venture that would own and operate the Kumtor gold mine. Kumtor, which has yielded about 270 tons of gold since 1997, is Centerra’s most productive mine.
In February, Kyrgyzstan’s parliament passed a resolution that required the government to negotiate a more lucrative deal with Centerra or unilaterally revoke the 2009 operating agreement. That resolution came on the back of efforts by some opposition figures to nationalize the mine.