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16 I Companies & Markets bne September 2022
The regulatory fever, which mining insiders complained happened without them being consulted, had the requisite result.
As of mid-July, around 100 companies or individuals had relinquished their claim to a mining licence, citing high renewal fees. Last year, the IBC estimated that anywhere
up to 90% of licence-holders might go down the same path. The end-game started to look a little more clear when the
“Industry observers worry that Kyrgyz authorities are itching to drive out yet more private mining companies so that they can place the bulk
of the industry into the hands of a single state-run enterprise”
head of the Cabinet, Akylbek Japarov (no relation to the president), in December approved the creation of a new, fully state-owned mining holding company called Heritage of the Great Nomads. As described in an official press release, Great Nomads is intended to serve as a “large integrated structure that can optimise the deployment of state resources in the implementation of subsoil projects.”
Kumtor was placed under the tutelage of the holding company, as were dozens of other sites. Great Nomads was also given control over several hydropower generation facilities and holiday resorts in the Issyk-Kul region.
In February, Tengiz Bolturuk, the man who had been put in charge of Kumtor when it was wrested from the control of Toronto-listed Centerra Gold, was appointed chief executive of this new behemoth.
Bolturuk has not endeared himself to Kyrgyz mining insiders or lawmakers.
President Japarov’s trust in him has ensured him a smooth ascent right to the top, however.
Like the president, Bolturuk was born in the Issyk-Kul region. He obtained a mining degree at the Moscow Steel and Alloy Institute in 1987 and returned to Kyrgyzstan after working
for a brief period as a mining engineer in Russia. His story
is that he was involved in early operations at the Kumtor mine in the mid-1990s. By the end of that decade, he had moved to Germany to continue his studies. In 2002, he emigrated to Canada and eventually obtained Canadian citizenship, which he continues to hold along with Kyrgyz citizenship – a fact that has inspired much disdain among
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lawmakers. Again according to Bolturuk’s own personal history, he has racked up experience working on 18 separate mining projects in 13 countries.
The call to return home came from President Japarov himself. Newly sprung from prison, where he was serving a sentence on abduction charges, Japarov in late 2020 turned to Bolturuk to implement a root-and-branch revamp of the mining industry.
Bolturuk’s high-handed manner has grated, however. While in charge of Kumtor, he angered members of parliament
by declining to brief them on progress in negotiations with Centerra or on how revenues from Kumtor were being spent.
There was more exasperation in June when it emerged that Great Nomads had installed itself in a central Bishkek office costing $50,000 a month. Lawmakers complained this was too high a price.
Jenishbek Toktorbayev, one of the liveliest critics of Great Nomads in parliament, accused Bolturuk of trying to fashion himself into a latter-day khan.
“My dear Tengiz Bolturuk, everyone is equal before the law. Come to your senses while you still have the time. Who gave you the right to waste people's money like this?” Toktorbayev said in parliament.
The complaints appeared to have an effect. On June 21, the president’s spokesman, Erbol Sultanbayev, said the office relocation had not been approved by the country’s leadership and that Bolturuk had been reprimanded.
In another attempt to mollify Bolturuk’s critics, the government said it had launched an investigation into how Great Nomads was managing revenues from Kumtor.
Important people have Bolturuk's back, though. Speaking
to lawmakers, the head of the security services, Kamchybek Tashiyev, dismissed criticism of the mining chief as unfounded. As long as Bolturuk's powerful supporters are around, the nationalisation agenda will likely remain in place.
For Sydykov, the head of the IBC lobbying group, the drift toward state control portends little good.
“We and the government need to settle on which road to take. Should we follow the market economy with minimal state interference in the economy, as they do in developed countries?” he said. “Or should we go with a command economy, a planned system, which has proven to be unsustainable in practice. We are seeing that the [Kyrgyz] authorities are settling on the second path, not only in the mining sector, but also in other areas.”
Alisher Khamidov is a writer based in Bishkek. This article originally appeared on Eurasianet.org