Tajikistan threatens to scrap giant silver mine tender

By bne IntelliNews July 31, 2013

bne -

Dushanbe threatened on July 30 to end discussions with an international consortium led by Kazakhstan's Kazzinc to develop Tajikistan's largest silver deposit, claiming it's ready to launch a new tender process.

The decision could lead to substantial delays in starting production at Kalon Konimansur, which is forecast to have a transformative effect on the Tajik economy. The project is expected to cost $3.5-4bn according to Tajik officials, and will employ around 10,000 during construction.

Dushanbe had also expressed hope that the launch of Central Asia's first open competitive tender for a deposit of such a size would help to establish the country on the map for international investors. Konimansur Kalon contains around 1m tonnes of ore, and estimated silver reserves of around 70,000 tonnes.

Details of the Kazzinc-led consortium's bid have not been disclosed. However, Shuhrat Rahmatboyev, first deputy head of the State Committee on Investments and State-owned Property Management, told a Dushanbe press conference on July 30 that the offer currently on the table from the Kazzinc-led consortium is unacceptable for the government.

The bid from the consortium - which also includes Kazzinc's parent company Glencore International, Kazakh Konimansur and Tajikistan's Adrasman - is the only one remaining on the table, after rival bidders pulled out of the process. However, rather than accept it, Dushanbe may now scrap the current process altogether and launch a new tender to find a developer for the field, Rahmatboyev told journalists. "This issue is currently being considered at the level of government commission and we must arrive in the common view on this issue in the near future," Rahmatoboyev said, according to Asia Plus.

The present international tender to develop Konimansuri Kalon was announced nearly four years ago, in November 2009. Four contenders were shortlisted the following March: the Kazzinc consortium, BHP Billion, and two Chinese companies - Ziti Mining and Sichuan Group. The Chinese were the first to pull out, followed by BHP Billiton in July 2012.

BHP's exit is understood to have been motivated by its strategy to scale down investment projects and focus on cost control, rather than due to problems connected to the Tajik project. The move was still a blow for Dushanbe however, which had previously turned down offers from several Russian companies to develop Kalon Konimansur in favour of a competitive tender process.

The competition is believed to have been dampened by wider issues in Central Asia's poorest country, which have reduced both the level of interest and the price potential bidders are willing to pay. Tajikistan's landlocked location and poor transport and energy infrastructure means any successful bidder would have to invest into both road and energy infrastructure, in addition to the costs of building the mine and processing facilities.

The Kalon Konimansur deposit is also located directly under the town of Adrasmon, near Tajikistan's border with Kyrgyzstan. For the project to go ahead, around 13,000 people would need to be relocated, which would constitute one of the largest relocations ever carried out worldwide.

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