Gold-digging in Kyrgyzstan

Recent protests over a gold mine in northwestern Kyrgyzstan involve local villagers who are fearful of possible chemical spills on their land and angry at being left out from the consultation process. But some commentators note that the dispute is taking place as commercial rights to the Jeruy mine change hands yet again, and they see a connection between grassroots protests and the high-level struggle for control of Kyrgyzstan’s gold mines.



Kyrgyz prime minister Almazbek Atambaev had been in the job for less than two months when he was dragged into the dispute at the Jeruy mine at the end of May.



Jeruy is the second largest gold deposit in Kyrgyzstan, and its long-delayed development is seen as vital to economic growth.



For the previous six months, locals had carried on protests by attrition, sporadically blocking the road to the mine to stop trucks bringing workers and equipment to the mine, located in the Talas region.



On May 26, Atambaev went to Jeruy to urge local people to open the road and allow development work to resume. He tried to reassure a sceptical audience that once the mine was finally up and running, it would net 500 million US dollars a year in added revenue for central government, while another 150 million dollars would go straight to Talas region.



When Atambaev’s motorcade was setting off to return to Bishkek, a crowd of 300 to 400 villagers blocked the road and pelted the official cars with stones. Several police officers were injured and government cars were damaged.



Police made a number of arrests and launched a criminal investigation into the incident.



At one level, the dispute is about a rural population worried about environmental safety in their area once commercial mining starts, and also unhappy that so far, they have seen none of the economic benefits of investment.



The primary ecological worry is a possible leak of cyanide, used in processing pure gold from ore.



In 1998, a truck carrying cyanide to the Kumtor gold mine – Kyrgyzstan’s largest – overturned and spilled some of its cargo into the Barskoon river, which feeds into Lake Issyk-Kul.



The scale of the resulting contamination is still hotly disputed. Activists say a number of people died soon afterwards and many more illnesses and fatalities were caused by poisoning of subsoil waters and crops. But the authorities have said the impact has been much less than claimed. A joint commission of Russian and Canadian scientists found in late 1998 that irrigation water reaching local villages did not contain enough toxic traces to cause health concerns.



There is a direct parallel between Kumtor and the situation now at Jeruy, as in both places, grassroots concerns about environmental worries and demands for compensation are going on against a background of high-level discussions on contractual arrangements, and even questions about whether foreign investors should be allowed in the gold industry at all.



“The people are not being kept informed about whether Kyrgyzstan’s interests are being protected, whether licenses to develop fields are issued to companies correctly, and whether our legislative requirements are observed,” said opposition member of parliament Temir Sariev.



At the Kumtor mine, high in the mountains of Jeti-Oguz region at the southeastern end of Lake Issyk-Kul, there were similar scenes in the first two weeks of May as protesters blocked the main road up to the mine.



They were demanding further compensation payments for the 1998 spill, and also a review of the government’s agreement with Canadian investors Centerra Gold, who run the mine through the subsidiary Kumtor Operating Company, KOC.



The protests followed a parliamentary debate in late March over a bill which would if successful cancel the contract with Centerra and hand the mine back to the government.



Even though the Kyrgyz government already holds 16 per cent of the stock in Centerra, and it is unlikely it could run a high-tech mining operation on its own, the debate is a live and highly politicised one in Kyrgyzstan.



Re-nationalisation is probably not imminent, since the bill would need a parliamentary majority and a final signature from President Kurmanbek Bakiev.



Yet many politicians are worried about the many contracts signed with a variety of gold industry over the years since independence in 1991, allegations of corruption and certainly a lack of transparency in many of these deals, and suggestions that the Kyrgyz state has lost out financially as a result.



These concerns, tinged too with some nationalist sentiment, dovetail neatly with the worries expressed by local groups about health and livelihood.



KOC vice president Andrei Sazanov said in early May that all the talk of re-nationalisation and protests by locals had dented Centerra Gold’s position on international stock markets, and the Kyrgyz government as a shareholder had consequently lost some 60 million dollars this spring.



A special government commission is currently holding talks with Centerra.



The Jeruy protests similarly come at a time of transition at the top, with one foreign investers pushed out unceremoniously and two more acquiring the mine’s assets and the right to dig gold, respectively.



On April 26, KazakhGold, a major mining firm in Kyrgyzstan’s bigger neighbour, announced that it had bought out Norox Mining, the company which owns the Jeruy gold processing plant via a two-thirds holding in the Talas Gold Mining Company.



The Kazak firm bought the Norox shares from a subsidiary of the UK-based mining firm Oxus Gold.



What KazakhGold did not acquire was the right granted by the Kyrgyz authorities to actually mine the deposit, although an April 26 statement made it clear that it was interested in doing so.



Oxus Gold held the operating license until last year, when the Kyrgyz government took it away following allegations that the company had breached some terms of its agreement. Oxus has described some of the government’s actions as unlawful.



The license now rests with a firm called Jerooyaltyn, set up by the Kyrgyz government and an Austrian company called Global Gold. Jerooyaltyn’s plans for the mine are unclear.



Some observers say the real issue being played out at Kumtor and Jeruy is attempts by politicians to exert control over the mines. The campaign to seek fair solutions for local communities is merely a sideshow that is being exploited for bigger ends, they say.



“Kyrgyzstan’s natural resources are being divided up. The fact that conflicts around the major gold deposits are heating up is intimately connected with corruption,” said Tolekan Ismailova, head of the Citizens against Corruption pressure group.



Political analyst Zainidin Kurmanov believes the political and business turbulence surrounding Kyrgyzstan’s gold mines is affecting – perhaps even driving – the local protest movements.



“There are various financial groups behind these [mining] projects, and they in turn are backed by certain politicians. Civil society gets drawn into the struggle for ownership, because that struggle needs to be framed within a clear, understandable and attractive agenda. And that is where the environmental issue comes in,” Kurmanov told IWPR.



Kurmanov said the grassroots protestors are probably completely unaware of the wider political and business context. But he argues that a pattern of selfless, public-spirited actions being manipulated by specific interest groups is bad for Kyrgyzstan.



“It’s catastrophic for our country, because such actions show that Kyrgyzstan is not open to attract cooperation and partnership,” he said.



Taalaibek Amanov is an IWPR contributor in Bishkek.