Kyrgyzstan preps mining project with China in mind

Kyrgyzstan preps mining project with China in mind
The government wants to see agrarian, mountainous Naryn turned into “an industrial-energetic region.” / Lukas, cc-by-sa 2.0.
By Aigerim Turgunbaeva for Eurasianet July 18, 2022

Kyrgyzstan is readying to develop a long-contested mineral deposit, shrugging off environmental and economic concerns about a project activists say is tailor-made for China.

The giant Zhetim-Too deposit in Naryn province is rich in an array of mostly non-precious metals, such as iron ore, although little real exploration has been conducted there since the Soviet period. 

Sadyr Japarov announced his intention to exploit Zhetim-Too not long after coming to power in 2020 and cited the country’s debt to China – around $1.8bn owed to Exim Bank – as a motivation.

“We can pay off $1 billion in one year if we do it with resources,” Japarov said. 

Those comments saw a wave of criticism and speculation that rights to mine part of the territory had been acquired – not for the first time – by a Chinese company. 

Japarov’s office fired back, accusing critics of seeking to score points ahead of presidential elections and insisting that no deal had been struck. 

His ally and Kyrgyzstan’s de facto national mining chief, Tengiz Bolturuk, has suggested that exploiting Zhetim-Too fully could require investment to the tune of $2bn. Kyrgyzstan’s GDP is about $8.5bn.

Signs suggest the project is in motion, however it will be funded.

Earlier this month the president appointed a new governor of Naryn, Altynbek Ergeshov. At Ergeshov’s official posting ceremony on July 6, cabinet chief Akylbek Japarov – not related to the president – named Zhetim-Too along with several other projects and instructed Ergeshov to turn agrarian, mountainous Naryn into “an industrial-energetic region.”

As the country’s de facto prime minister, Akylbek Japarov has been the loudest voice warning about the perils of debt to China, noting last month that if Bishkek could not make its payments on time, it would have to cede control of strategic infrastructure built with Chinese credit. He mentioned Sri Lanka and Pakistan as precedents.

Nevertheless, he promised last week, the government would not pursue projects that damage the environment.

Scandals at Zhetim-Too date back to Kyrgyzstan’s second president, Kurmanbek Bakiyev, who was chased from the country in 2010 by crowds enraged at his corruption.

According to former national security chief Adil Segizbayev, Bakiyev’s son Maksim acquired for a symbolic sum the licence to mine the Dangi section of the deposit in 2009. 

That part of Zhetim-Too alone contains around 500mn tonnes of iron ore, according to official estimates. 

The younger Bakiyev then sold a majority stake for $20mn to a Chinese investor who built an ore processing factory over the border in Urumchi, Segizbayev said, offering an account that other politicians have supported.  

Segizbayev said Japarov’s government was preparing to give away Zhetim-Too to “return Maksim Bakiyev’s debts” to the investor. Segizbayev, who was standing against Japarov in presidential elections when he made the comments, was arrested not long after. But other politicians and public figures have raised similar fears.  

The 2009 plans to develop Zhetim-Too generated protests in Naryn, where locals blocked a road that a Chinese company was building. 

After the 2010 revolution, investors in the deposit saw their licences torn up.

Media periodically raised fears that Zhetim-Too would be used as collateral for a railroad linking China to Uzbekistan via Kyrgyzstan.  

Activists argue that the project poses risks to forested areas, vast pastures and the river Naryn. 

Ulan Usoiun, a prominent activist who is campaigning against the development, told Eurasianet that “the traces of China are everywhere” in the government’s plans for Zhetim-Too. 

“Officials say that a state company will run the project, but we know that no Kyrgyz company has these funds,” Usoiun told Eurasianet. 

Usoiun recently debated with the cabinet’s deputy chair, Edil Baisalov, on a pasture not far from the deposit.

Baisalov said the project would enrich residents, and that any activity would be first agreed with the local population.  

“I told Baisalov that local residents, activists, especially young people, are categorically against the development of Zhetim-Too. Of course, he met with shepherds, spoke beautiful words. But no one believes [the government],” Usoiun said. 

In fact, surveys carried out under the auspices of the International Republican Institute (IRI) suggest that belief and trust in Japarov and his administration remain high. 

While in opposition, Japarov made a name for himself as a crusader against Kumtor gold mine’s former Canadian owners, Centerra Gold, eventually being sentenced in 2017 to jail on kidnapping charges related to a rally against the company.

He was freed during post-vote political chaos three years later, and his reputation has further soared after he saw through a promise to nationalise Kumtor.

Zhetim-Too could prove one of the strongest tests of his popularity yet.

Aigerim Turgunbaeva is a journalist based in Bishkek.

This article originally appeared on Eurasianet here.


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