Much depends on how we do mining – by Kate Heartfield (Ottawa Citizen – June 6, 2013)

Kate Heartfield is the Citizen’s deputy editorial pages editor.

The Canadian-owned Kumtor gold mine accounted for 12 per cent of Kyrgyzstan’s GDP in 2011. Canadians agonize over the bureaucratic changes at CIDA, about how best to go about ending poverty, and meanwhile a Canadian company that isn’t even a household name — Centerra Gold — is responsible for a big chunk of a developing country’s economy.

And as the recent protests and roadblock showed, as the mine goes, so goes Kyrgyzstan’s national politics. If Canada is going to make a notable difference in global development and security over the next few decades, it’s going to be in places like the Kumtor mine.

The UN’s “high level panel of eminent persons” recently reported on what the world’s development goals should be after 2015. How do we maintain or even accelerate the unprecedented reduction in global poverty that has marked the beginning of this century? Globally, the extreme-poverty rate has been cut in half over the last 20 years; that amounts to nearly a billion people pulled out of dire need. Another billion, though, are still extremely poor.

As the Economist pointed out recently, those two decades have taught us valuable lessons about how to reduce poverty. Basic social safety nets, infrastructure and governance are one part of the puzzle; liberalizing trade and investment is another. But while we now know it’s possible, eradicating extreme poverty by 2030 will require a more targeted approach, making sure to “leave no one behind,” as the UN report puts it.

“It is time for the international community to use new ways of working, to go beyond an aid agenda and put its own house in order: to implement a swift reduction in corruption, illicit financial flows, money-laundering, tax evasion, and hidden ownership of assets,” the UN report concludes. “We must fight climate change, champion free and fair trade, technology innovation, transfer and diffusion, and promote financial stability.”

So Canada’s task is to ask if there is anything it can do to put its own house in order, a house that is built on resource extraction.

Everything about Kumtor is breathtaking — quite literally, as it’s more than 13,000 feet above sea level, surrounded by gorgeous mountains and glaciers.

In 1998, a truck accident spilled sodium cyanide into a local river. That and other environmental concerns are one reason not all the locals are happy about the mine. And there is also a perception that the mine could be doing more for Kyrgyzstan, even calls for it to be nationalized. In this revolution-prone country, the politics are volatile.

Centerra is in talks with the Kyrgyz government over a potential restructuring arrangement that would, according to Centerra, include “a joint venture company that would own the Kumtor Project.” The details are thin.

It is in Kyrgyzstan’s interest to handle this well, in part because future foreign investment could depend on it. It is also in its interest because the mine really is a good thing for Kyrgyzstan overall. Thirteen per cent of gross revenues go to the state, and a further one per cent goes into a regional development fund, which builds infrastructure such as schools and hospitals.

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