Gold is Kyrgyzstan’s main hope

Based on the results of last year, the Kyrgyzstan government received dividends from the exploitation of the republic’s largest gold field by Cameco (a Canadian company) for the first time. This dividend brought in $6 million. This is not a really large sum considering the fact that Canadians mine twenty tons of gold in Kumtor every year, which amounts to about $200 million on the world market. However, on the other hand, the dividend became the very first payment to the legal owner of the gold field over several years of exploitation. To date, almost all of the earnings were spent on the repayment of a $500 million loan borrowed by the company before the begining of mining operation.

Only the Makmalsky enterprise situated in the Naryn region of Kyrgyzstan mined gold during the Soviet era. Additional fields had already been opened at that time, but they were not developed, as, probably, more profitable mines must have existed then. Information about gold mining was classified in the Soviet era. We know only that gold mining in the republic of Kyrgyzia was reduced in the final years before the breakup of the USSR. This was explained with the low gold content of the mines' ore. At the beginning of the work of the Makmalsky enterprise, the gold content made up about 12 grams per ton, but the amount was reduced to 4.8 grams by 1991.

Still, Kyrgyzstan decided to stake on gold mining first and foremost as soon as it received its independence. Special attention is to be paid to the Kumtor gold field situated in the Issyk-Kul region 4,000 meters above sea level. The field was already opened during the Soviet, but no financing was appropriated for gold mining then. Independent Kyrgyzstan asked foreign investors for help. Great scandals arose when a contract with Cameco was signed. The contract was reviewed and supplemented several times. The parliament initiated a so-called “gold scandal”, and then Prime-Minister Tursunbek Chyngyshev fell victim to the scandal. The scandal occured in 1992, when the Kumtor gold company, a Kyrgyzstan-Canadian joint enterprise, was created. The Canadian company received 30% of the assets in the joint-stock enterprise and 70% were given to the Kyrgyzstan government represented by the Kyrgyzaltyn company (created at the same time).

Last year, the partners received real profit for the first time; this year’s results are expected to be no less those of 2001. Indeed, the gold price in on a constant rise, because of the aggravation of conflicts in the world and increasing terrorist activity. Light gold resources, which used to be mined in a cheap open mode in Kumtor, have been considerably reduced. The problem of subsurface mine construction has not yet been solved. There are some fears that investors may refuse to mine gold underground. The year 1999 created a precedent of the enterprise’s unprofitable work, and not a single investor would like such conditions.

Therefore, the ten-year anniversary of the joint-stock enterprise that is to be celebrated at the end of the year may turn out to be a happy occasion, for the Kyrgyzstan government at least. Investors in the enterprise still disagree with the scale of the project expected at the conclusion of the contract.

Yury Razgulyayev PRAVDA.Ru Bishkek Kyrgyzstan

Translated by Maria Gousseva

Read the original in Russian: http://www.pravda.ru/main/2002/04/10/39508.html