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Centerra Gold and Kyrgyzstan: time for a marriage counsellor Add to ...

Tashiev, Japarov and one other Ata-Jurt deputy were arrested. In late March, they were found guilty of attempting to seize power, handed short sentences, and stripped of their parliamentary seats. Outside the courtroom, protesters demanded their release—and the nationalization of Kumtor.



Last August, a state television studio in Bishkek prepared to host Kyrgyzstan’s first live auction of mining licences–part of the post-Bakiyev government’s promised efforts to boost transparency. But before the broadcast could begin, a group of men burst into the building shouting, according to a Reuters correspondent present, “We won’t let you sell our motherland.” The auction was cancelled.

“This was the work of those who want to sell licences under the carpet,” Uchkunbek Tashbayev, director of the State Geology Agency, told Reuters. Four months later, Tashbayev was arrested, accused of stealing gold and selling exploration licences–under the carpet, to use his own phrase.

Kumtor is an outlier, the lucky one that got in before the mining sector became so messy. Though the Geology Agency says it has issued 164 gold-mining licences, Kumtor is the only place pulling gold out of the ground besides two small state-run mines. Other Western and Chinese firms are exploring, but every one has been prevented from digging by trouble with licences or local opposition.

A fair share of Western miners blame Kumtor for fuelling the anti-mining movement by failing to engage local communities. But authorities have fanned the flames. The Kumtor drama is “turning the whole society against us. The state media narrative is, constantly, ‘fighting investment is a good thing,’” says one foreign miner with 10 years’ experience in the country. “Kyrgyzstan’s reputation has been destroyed.” In February, a survey by the Fraser Institute ranked Kyrgyzstan the fifth-worst place in the world to invest in mining.

Kumtor may be lucky. In 2011, men on horseback twice attacked a South African-run exploration camp in Talas province, once with Molotov cocktails. In the same province that year, horsemen threatened supporters of an Australian project. Some miners exploring the area feel they have upset feudal hierarchies, provoking opposition from local big shots who fear foreign investment will dilute their own power.

The national government promises to auction five deposits this spring, hoping to garner at least $460-million. One is Jerooy in Talas, estimated to be the second-largest deposit in the country, with up to 100 tonnes of gold reserves. But the licence, for which Kyrgyzstan is asking $300-million, has been in legal limbo for years.

The only investors thought to have the patience for this chaos are from China, Kyrgyzstan’s leviathan of a neighbour. With their cheap credit and tolerance for unorthodox business practices, the thinking goes, the Chinese have the time to wait until no one else is interested.

“The Chinese are happy to sit and wait because that ensures Kyrgyzstan stays poor and, they’re thinking, ‘as we in China get richer, it will be cheaper to take over eventually in relative terms,’” says the foreign miner who has logged 10 years in the country.

The Chinese will get no easy pass from local communities, though. In 2011, in Naryn province, employees of a Chinese-owned mining company and several local police officers were beaten by a mob demanding that the mine’s licence be annulled, again ostensibly on environmental grounds. Throughout the region, China is increasingly viewed with suspicion for indulging corrupt officials and showing a barefaced disregard for public health. “Merited or not, the stereotype of China as the new economic imperialist is taking root,” the International Crisis Group, a Brussels-based think tank, reported in February.



The man who ultimately decides how to spend the money Kumtor contributes for the Issyk Kul development fund is the provincial governor. He would only meet on the condition I ask nothing “personal” or “political.” On the one day a meeting was possible, after a wait in his Karakol office, it turned out he was out of town anyway. So I never got to ask him about a story going around town.

The governor, a local businessman told me, wanted a particular vanity tag for his car. (Licence plates with unusual sequences—“7777 B” or “1111,” for example—alert everyone, including the greedy traffic police, that this guy is not to be messed with.) The plate he sought, being the number-one guy in Issyk Kul, was “0001 IK.” But the number was already registered to a local woman. The governor tried to take it. She resisted, the businessman explained.

“Then he had all the various inspectorates harass her until she gave in.”

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