bne -

A state of emergency has been declared around Kyrgyzstan's largest gold mine Kumtor after deadly clashes broke out between protesters angry with the mine's foreign management and the police. At least one person is said to have died as security forces stepped in to prevent several thousand blocking the road to the mine.

Fighting occurred when police attempted to stop 2,000-3,000 people marching on a local electricity substation to shut down the power supply to Kumtor. State news agency Kabar reports that police used tear gas and stun grenades to stop the protesters approaching the substation and force them off the road. Protesters fought back with stones. At least one person is reported to have died in the clashes and more than 30 people have been hospitalised. Over 90 have been arrested so far.

President Almazbek Atambaev declared a two-week state of emergency in the northern Dzhety Oguz district on May 31, to allow security forces to protect the mine. A curfew from 09:00 to 18:00 has also been issued.

Atambaev criticised the protesters, saying their attack on Kumtor "threatens the republic's national security and has significantly damaged the country's economy", potentially resulting in economic losses of up to $125m, according to RIA Novosti. Atambaev has sought to stem the growing tide of resource nationalism in Kyrgyzstan, where Kumtor is the most high profile, but by no means the only, foreign-owned mine that's being targeted by activists.

The protest against Canada's Centerra Gold, which operates the mine, has steadily escalated throughout the week as the numbers grew from several hundreds into thousands. Initial demands for compensation for environmental damage turned to calls for the mine to be nationalised and the investment agreement with Centerra to be torn up.

Work at Kumtor, which accounts for around 12% of Kyrgyzstan's GDP, was suspended on May 30 after protesters cut the power supply to the mine, although electricity supplies have since been restored.

Toronto-listed Centerra announced in a statement late on May 30 that an "orderly shutdown" of the mine has started following the electricity cut-off and the blockade of the access road. "The camp and other facilities at site are also currently operating on back-up power. Mining operations have also been suspended other than continuing operations to manage the ice and waste in the high movement area of the open pit," Centerra's statement said.

"The Company continues to cooperate closely with the Government and local authorities with a view to a peaceful resolution of the situation. If grid power and road access is not restored in a timely manner the Company expects that there will be a material negative impact on the Company's operations, including its gold production and financial results," the company added.

Several Kyrgyz government officials including Economy Minister Temir Sariev met with the protesters on May 30 in an attempt to persuade them to end the action and allow work to continue at Kumtor, but without success.

The protests come as the deadline for negotiations between Bishkek and Centerra over the Kumtor investment agreement approaches. In February, the Kyrgyz government announced plans to renegotiate the investment agreement on Kumtor, agreed in 2009 under former president Kurmanbek Bakiyev, setting a three-month deadline for the talks. At the meeting on May 30, Sariev tried to persuade protesters to wait for the results of the Kumtor review being carried out by a government commission.

Kumtor is one of the most sensitive issues in Kyrgyz politics, with the majority stake held by a foreign company a continual source of grievance especially among the nationalist opposition. With resource nationalism on the rise in Kyrgyzstan and indeed the CIS region as a whole, Kumtor is among several foreign-run mines being targeted by protesters.