INSIGHT – Young nation Kyrgyzstan fights over gold at top of the world – by Dmitry Solovyov (Reuters India – April 3, 2013)

KUMTOR, Kyrgyzstan – (Reuters) – In an impoverished young nation with a habit of overthrowing its rulers, the future now balances on a mountain of gold at the top of the world, where the air is so thin collapsing visitors may be rushed to a pressure chamber for oxygen.

After two revolutions in eight years, nationalists in Kyrgyzstan are threatening to return to the streets to topple another government unless it expropriates the Kumtor goldmine, a treasure they say was sold off too cheaply to foreigners.

Parliament in the remote ex-Soviet Central Asian state has set a deadline of June 1 for the government to renegotiate – or repudiate – a deal struck in 2009 with Canadian firm Centerra Gold (CG.TO) to operate the mine.

A state commission said the Canadian firm has been paying too little to run the mine, and accused it of inflicting environmental damage leading to $457 million in fines.

Three lawmakers were convicted last week of trying to seize power in the country by force after leading demonstrations late last year demanding the mine be renationalised.

Prime Minister Zhantoro Satybaldiyev, who took his job last September as a technocrat pledging to alleviate poverty in the country of 5.5 million, says compromise is vital and banishing Centerra would dash hopes of winning more foreign investment.

“Our investment climate will directly depend on how successfully we resolve the Kumtor issue,” the 57-year-old told Reuters in an interview.


A landlocked country half way between Moscow and Beijing, Kyrgyzstan holds its national treasure at the mine 4,000 metres (12,000 feet) up in the Tien Shan mountains, near one of the world’s remotest borders, the old Soviet frontier with China.

Trucks the size of three-storey houses chug in a gigantic open pit to deliver rocks to a gold-extracting mill, which runs 365 days a year.

Inside a guarded room, two workers move slowly in silvery heat proof overalls, pouring bright orange molten gold from a crucible into moulds. Minutes later, four shiny bars worth $2.6 million are stamped and sealed in vaults.

Under the deal reached with ousted President Kurmanbek Bakiyev before he was toppled in a 2010 revolution, the mine’s operating company pays 14 percent of its gross revenue to the Kyrgyz state.

The state commission that investigated the deal concluded that the royalty is far too low, leading to parliament’s call for the deal to be revised or repudiated.

The dispute has reached the streets. Last October, three nationalist lawmakers led a crowd of supporters trying to storm the government headquarters, demanding Kumtor’s nationalisation. The trio, from Kyrgyzstan’s poor, volatile and ethnically mixed south, were jailed last week for up to 18 months.

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