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Kumtor mine is the scene of the second highest gold mining operation in the world.
CENTRAL ASIA BLOG:
Kyrgyzstan’s gold grab
Kanat Shaku in Almaty
It isn’t every week that two Western powers join up to essentially warn
a small frontier market nation that its actions risk soiling its reputation as
a feasible destination for foreign direct investment, but that’s essentially what happened when the UK and Canada responded to Kyrgyzstan’s move to seize Kumtor gold mine.
Centerra Gold, the Toronto-listed miner that owns Kumtor – one of the largest gold mines in Central Asia operated
by a foreign investor – through its subsidiary Kumtor Gold Company (KGC), has over the years gotten well used to Kyrgyz governments of various stripes attempting to milk it for more than contractually bargained for, but the tactics deployed by populist strongman President Sadyr Japarov to wrestle the mine from its hands were especially
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aggressive and shocked foreign investors. So much so that the British government, with a cold eye on the fact that UK-based BlackRock Investment Management holds a 10.6% stake in Centerra, lined up with the Canadians in warning Kyrgyzstan that measures that “negatively impact trade and foreign direct investment will further undermine already fragile economic livelihoods of the Kyrgyz people”.
Kyrgyzstan moved fast. In just two weeks, the government went from passing a bill on allowing a takeover of the flagship mine on environmental grounds to Japarov signing that bill into law to the parliament initiating the takeover on May 17. Almost simultaneously, a court slapped KGC with a $3.1bn fine for environmental damage.
No love lost
There would appear to be no love lost between Japarov and Centerra. In early October last year, avowed and fervent nationalist Japarov was still resident
in a prison cell, serving a sentence for having in 2013 taken part in events
that saw the kidnapping of a regional governor used as a hostage in a standoff with authorities over demands for the nationalisation of the mine. During
the turmoil into which Kyrgyzstan was plunged eight months ago, Japarov was busted out of jail by supporters, after which he quickly took command of events that rapidly delivered him the presidency.
Curiously enough, Japarov quickly assured observers that his Kumtor campaigning days were over and that he would not in the current context be