Kyrgyzstan abandoned its first attempt to sell a batch of new mining licences on Tuesday after protesters stormed a televised auction, disrupting efforts by the impoverished former Soviet state to attract investors to its untapped mineral riches.
Around 50 protesters, many wearing traditional Kyrgyz felt hats, burst into a television studio shouting nationalist slogans shortly before the scheduled live broadcast of the first public auction under new mining laws adopted this year.
A Reuters correspondent in the studio saw officials flee the building as scuffles broke out between police and protesters, some of whom shouted: “We won’t let you sell our motherland!”
Kyrgyzstan’s new government revised its mining laws in April in an attempt to stamp out corruption and attract investors to bolster a fragile economy that relies heavily on output from a single gold mine, owned by Toronto-listed Centerra Gold.
The mining law amendments require all small concessions to be auctioned publicly to the highest bidder, a move designed to end the clandestine exchange of licences for a handful of dollars with the sole purpose of re-sale.
Uchkunbek Tashbayev, director of the State Agency of Geology and Mineral Resources, which organized the auction, said he believed the protest had been orchestrated by opponents of these reforms. He told Reuters the auction would be rescheduled.
“This was the work of those who want to sell licences under the carpet,” he said. “We must not deviate from this path.”
The protest comes amid political infighting that led to the collapse last week of the coalition government, under the strain of a shrinking economy and corruption allegations against Prime Minister Omurbek Babanov.
A sharp fall in production at Centerra Gold’s Kumtor mine due to ice movement in the high-altitude pit contributed to a 5 percentage-point contraction in GDP in the first seven months of the year.
Angry villagers have sporadically blocked the only road to Kumtor and, after a move by some deputies to renationalize the mine in June, lawmakers directed the government to revise the current operating contract.
Demonstrators inside the television studio called on the government to complete its Kumtor review before proceeding with the sale of other mineral assets.
“There’s a great mistrust of the government as long as the Kumtor question is unresolved,” said Mavlyan Askarbekov, leader of the Erkin El youth movement.
President Almazbek Atambayev has appointed the Social-Democratic Party, which he previously represented as prime minister, to form a new coalition government within 15 days.
Kyrgyzstan ranked joint 164th of 183 countries in Transparency International’s 2011 Corruption Perception Index, level with Guinea. The country has overthrown two presidents since 2005 and has suffered periodic bouts of ethnic violence.
Mr. Atambayev has been a proponent of the mining law reforms, which would potentially unlock hundreds of mineral deposits mapped by Soviet geologists but never brought into production.
Compared with Kumtor, the 11 small gold concessions and a coal licence offered up for auction are tiny. Located across four provinces, most are still at the exploration stage, with starting prices ranging from $60 to $65,000.
According to a list of participants published by the agency before the auction, around 50 local and foreign firms, including companies from Azerbaijan, China, Russia and Turkey had been due to bid. The list did not include any major mining companies.
Some of the protesters had travelled to the capital Bishkek from regions where the mining concessions are located. They expressed fears about environmental damage and suspicion that mining profits would not be shared with the local communities.
“The people are being swindled. The foreigners are robbing us,” protester Bakytbek Muraly uulu, leader of the Kyrgyz National Solidarity movement, said as he was being ejected from the studio.
Supporters of Mr. Babanov’s government, which is continuing in an acting capacity pending the formation of a new coalition, say a transparent system of auctions would put an end to illicit licence trading they say flourished under earlier presidents.
“Who is behind this? What do they suggest? That we do away with auctions and tenders and sell the licences for 300 som (about $6)?” Mr. Babanov said in parliament.
A date for the rescheduled auction has not yet been set. Economy Minister Temir Sariyev, also speaking in parliament, said: “If there is no responsibility and no discipline, the investors will not come.”
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