Kyrgyzstan revokes gold mining licences

By bne IntelliNews April 25, 2012

Clare Nuttall in Almaty -

The Kyrgyz government has revoked 46 gold mining licences, as it continues a bid to clean up the mining industry and improve the country's corrupt image among international investors. However, not everyone is convinced.

Fines amounting to KGS242m ($5.2m) were collected in connection to undeveloped deposits and returned to the national budget, Prime Minister Omurbek Babanov said April 24 at a meeting of the Birimdik ruling coalition, according to local newswire

The cancellations were part of the government's efforts to clean up procedures for issuing mining licences. None of the licences revoked are for Kyrgyzstan's major mining operations. Kyrgyzstan's largest gold deposits are at the Kumtor and Jerooy mines.

After former President Kurmanbek Bakiyev was toppled in the April 2010 revolution, the interim government announced it was planning to clean up corruption within government agencies. Bakiyev came to power in the previous revolution of March 2005, promising to do away with the corruption and nepotism rife under his predecessor Askar Akayev. However, after a brief period of reforms, Kyrgyzstan became increasingly authoritarian and corrupt during his five-year rule.

The Kyrgyz State Geology and Mineral Resources Agency, which was responsible for issuing licences, was said to be one of the most corrupt agencies under the Bakiyev government. It was common during this time for licences to be issued to businesspeople with no connection to the mining industry, who would hold onto them in the hope of selling them on for a profit to a foreign investor. As a result, many potentially lucrative deposits remain undeveloped.

After coming to power in April 2010, Rosa Otunbayeva's interim government launched a moratorium on issuing new licences or renewing existing licences, which at the time prevented the handful of international investors developing deposits within Kyrgyzstan from going ahead with planned investments.

In fact, hand in hand with concerns over the country's political instability, the moratorium on issuing licences brought many projects to a halt. In November 2010, Dzheruialtyn - controlled by Kazakhstan's Visor - had its licence for the Jerooy gold deposit annulled. It is yet to be reallocated.

However, the situation has eased, and new licences are gradually being issued once more. Still, while many businesspeople in Kyrgyzstan believed the interim government's intentions towards the industry to be good, if dangerously heavy-handed, there have been complaints that licencing decisions are still politically motivated.

To that end, the government, seeking to encourage foreign investment and accelerate development of the country's mineral resources, now plans to reform the process. Economy and Antitrust Policy Minister Temir Sariev announced on March 13 that in future licences will be issued transparently, with a competitive tender process to be used for large deposits and either auctions or the right of first application to be used for smaller deposits.

Bishkek has also drawn up new mining legislation, which is currently being considered by parliament. The package of laws is intended to create clearer conditions for foreign investors, reduce bureaucracy and introduce an effective mechanism to revoke licences issued to companies who fail to develop their deposits.

However, there is already widespread criticism of the draft legislation, with the Kyrgyz Mining Association claiming that it does not prevent government and local officials from making arbitrary decision, according to reports in the Kyrgyz press.

Kyrgyzstan, which was ranked 164th out of 178 countries on Transparency International's Corruption Perceptions Index, has been making efforts to improve the situation. In addition to the plans for mining, Babanov's government has scrapped the Financial Police, which was notorious for corruption, replacing it with the new State Service for Combating Economic Crimes. Applicants for posts at the new agency have to take qualifying exams, which have been broadcast live on Kyrgyz television to show viewers that the test is impartial.

Related Articles

bne:Chart - Russia begins to steady the ship according to latest Despair Index

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

COMMMENT: Great challenges for Eurasia call for decisive solutions

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

IMF calls for Central Asia to tighten monetary policy

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

Register here to continue reading this article and 2 more for free or 12 months full access inc. Magazine and Weekly Newspaper for just $119/year.

If you have already registered, enter the information below with the same email you used previously and you will be granted immediate access.

IntelliNews Pro subscribers click here

Thank you. Please complete your registration by confirming your email address. A confirmation email has been sent to the email address you provided.

Thank you for purchasing a bne IntelliNews subscription. We look forward to serving you as one of our paid subscribers. An email confirmation will be sent to the email address you have provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

If you have any questions please contact us at

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:
  • Full access to the bne content daily news and features on the website
  • Newsletters direct to your mailbox
  • Print and digital subscription to the monthly bne magazine
  • Digital subscription to the weekly bne newspaper

IntelliNews Pro subscribers click here

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at

Register for free to read bne IntelliNews Magazine. You'll receive a free digital subscription.

If you have already registered, enter the information below with the same email you used previously and you will be granted immediate access.

Thank you. Please complete your registration by confirming your email address. The confirmation email has been sent to the email address you provided.

IntelliNews Pro offers daily news updates delivered to your inbox and in-depth data reports.
Get the emerging markets newswire that financial professionals trust.

"No day starts for my team without IntelliNews Pro" — UBS

Thank-you for requesting an IntelliNews Pro trial. Our team will be in contact with you shortly.