Kyrgyz Prime Minister Zhantoro Satybaldiyev said on January 29 that Bishkek is ready for "constructive talks" with Centerra Gold, as the government prepares to change the conditions under which the Canadian-based investor operates Kumtor, the country's largest gold mine.
MPs from Kyrgyzstan's ruling coalition have backed plans to renegotiate the investment agreement and change the tax regime for the company. At a meeting on January 25, MPs endorsed a report by the State Commission for the Inspection of Kumtor, which concluded that the existing agreement, signed under former President Kurmanbek Bakiyev in 2009, was not in the national interest.
Under that deal, the Kyrgyz state took a 33% stake in Centerra. Government officials also agreed a special tax regime for the company. However, amidst rising resource nationalism across Central Asia, several Kyrgyz parties have sought to amend it, although the parliament rejected a proposal to natioanlise the mine in mid-2012.
"Cooperation with investors within the framework of our legislation will ensure the stable operation of both mining companies and their shareholders, including Centerra Gold Inc.," Satybaldiyev said at a meeting with officials from the Asian Development Bank and the World Bank, according to Kabar. "A common approach will be applied to all investors in the mining industry in the framework of legislation of the country. All investors need to work in the same conditions."
"Why does the question of Kumtor keep being raised? Because the agreement was concluded in the interests of specific groups, but not the country," Satybaldiyev added.
Centerra issued a statement on January 25, saying that it "expects to continue discussions with the Government of the Kyrgyz Republic, with the objective of resolving matters through constructive dialogue. There can be no assurance, however, that this will be the case."
Kumtor is a highly political issue in Kyrgyzstan, where the mine's output accounts for around 12% of annual GDP. With resource nationalism on the increase in Kyrgyzstan, popular opposition to foreign ownership of the country's largest gold mine is growing.
Henry Kirby in London - Ukraine and Russia’s latest “Despair Index” scores suggest that the two struggling economies could finally be turning the corner, following nearly two years of steady ... more
Juha Kähkönen of the IMF - The Caucasus and Central Asia (CCA) region continues to navigate a wave of external shocks – the slump in global prices of oil and other key commodities, the slowdown ... more
Naubet Bisenov in Almaty - Caucasus and Central Asian (CCA) countries need to tighten their monetary policy to anchor inflation expectations, but excess tightening may weaken financial ... more