Mob attacks Australian mining company in Kyrgyzstan

By bne IntelliNews October 21, 2013

bne -

A mob, reportedly featuring local officials, struck the offices of mining company Z-Explorer in south Kyrgyzstan on October 18. The attack is latest in a wave of protests targeting foreign mining companies.

A crowd numbering around 200 locals stopped a bulldozer heading for the Shambesai gold deposit, which is being developed by the Australian company. Protesters then moved on to Z-Explorer's nearby offices. According to a spokesperson for the company - a subsidiary of Manas Resources - documents were burnt and computers and other equipment looted, reports Reuters.

The protesters said they were concerned that Z-Explorer's work could damage the local environment, including water supplies. However, a spokesperson for the company claimed political motives are more likely.

"Z-Explorer expresses its concern over this incident, in particular, over the participation of some deputies of the local council in these unlawful actions, which undermine trust in state power and have a negative impact on attracting investment," the spokesman said, according to Reuters.

Kyrgyzstan's nationalist opposition has been accused of being behind recent violence in several parts of the country, including around Kumtor, Kyrgyzstan's largest gold mine. Protests in the vicinity in early October saw the regional governor kidknapped temporarily amid calls for Kumtor to be nationalised.

In the wake of those events, President Almazbek Atambaev again spoke out against the opposition for deliberately stirring up unrest. "Their goal is again to disrupt the government and cause chaos in the country. Democracy does not mean mob rule." However, the government is struggling to push through a parliamentary vote on the latest proposals for ownership of Kumtor, which would hand Bishkek a 50% share alongside Toronto-listed Centerra Gold.

Investors clearly understand they are better off with the government than the opposition however. A statement from Manas Resources released on October 21 sought to limit the PR damage from the attack and play down the role of the local population and officials.

"A group of activists protesting against mining activities in the Kyrgyz Republic disturbed what was initially a peaceful negotiation regarding site works," the statement reads. "This group is likely to be affiliated with groups that have protested against mining elsewhere in the country."

Manas is also seeking to reverse the spokesman's comments regarding state level support, and convince that it retains confidence in the government. "Importantly, the company has received significant support from all levels of the Regional and Central

Government in regards to the handling of this incident," the statement continues. "The event is likely to act as a positive catalyst in empowering the administration of the Kyrgyz Republic to push for greater protection and cooperation at a local level."

That reiteration of faith in Bishkek comes in the context of the government's worries that the ongoing problems will hurt already precarious confidence amongst foreign investors.

"We will continue to work closely with the local community to address any concerns they have regarding the mine development," Manas Managing Director Stephen Ross said. "We have received strong endorsement from all respective levels of government regarding the high-grade, high-margin Shambesai Gold Project and we will continue with the current scheduled development."

Manas shares dropped 10% in early trading on October 21 as investors reacted to the news. Shambesai is expected to produce about 227 000 oz of gold, with production expected to start in the first quarter of 2014.

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