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How to support investors in Kyrgyzstan? Create state commission to check them

The year 2020 will remain one of the most difficult in the history of Kyrgyzstan. The national economy, medicine, and social order collapsed for some 12 months. Trust of not only citizens, but also foreign investors in the authorities collapsed after them.

Alarming figures

The volume of foreign investment in the country decreased by 31 percent compared to 2019.

Here is a couple more alarming data: the backbone of our economy — the mining sector — was marked by a 3.5-fold decrease in investments in geological exploration! All this occurred against the backdrop of rising prices in the global metals market.

Investments in mining and manufacturing also reduced by 9.5 percent and 3.7 percent, respectively.

The statistics for 2021 are also not encouraging. In January, the economy contracted 7.6 percent compared to the same period last year.

How MPs rushed to save the economy

How did domestic politicians react to the collapse of the economy? On February 17, 2021, deputies of the Parliament created a temporary deputy commission to study the work of Kumtor company. What for? Parliamentary deputies Maksat Sabirov and Akylbek Japarov stated that the commission should summarize and study in detail the work of Kumtor project.

Deputy Umbetaly Kydyraliev expressed himself more specifically. He said that the commission should study the issue of Kumtor’s compliance with the norms and requirements for the rational use of natural resources and environmental protection.

After such statements, investors investing hundreds of millions of dollars in technologically complex multi-year projects in Kyrgyzstan naturally tensed. The fact is that the government of Kyrgyzstan has a strategic agreement with the Canadian gold mining company Centerra Gold Inc. and both parties, having signed it, have undertaken obligations to strictly abide by it.

In addition, at the end of February 2021, Centerra Gold released a new technical report for Kumtor mine, which was compiled as of July 1, 2020. According to it, the life of the mine is extended until 2031. Thus, the projected total amount in taxes and other mandatory payments during the extended mine life will amount to more than $ 1 billion, and the volume of capital investments in Kumtor project — more than $ 2 billion.

During the work of Centerra Gold Inc. in Kyrgyzstan from 1994 to 2020, payments of the Canadian company in the country exceeded $ 4,486 billion.

If recalculated in soms at the current exchange rate, 379,964 billion soms got into the country’s budget in the form of taxes, mandatory payments, payments under the strategic agreement, purchases of goods from local producers, salaries to employees (99 percent of them are citizens of Kyrgyzstan), payments and dividends to Kyrgyzaltyn, payments for infrastructure during the operation of Kumtor.

It is not for nothing that a huge number of Kyrgyz citizens dream of working for the company. People are also attracted by good salaries, which are paid on time. The company employs over 4,000 of our citizens.

What do «environmentalists» from Parliament want?

However, especially caring citizens always know what the Canadian company can be criticized for. They say, it does extreme harm to the environment. At the same time, professional ecologists have repeatedly noted that the number of same argali and other alpine animals is much higher in the mine area than in other places in Kyrgyzstan.

Water samples are taken annually in rivers, as well as samples of soil (more than 9,000 samples), earth, waste ore at the mine.

This is done by the international laboratory Stewart Assay and Environmental Laboratories LLC (SAEL is a subsidiary of the international group of laboratories ALS). This is understandable — if the Canadians allow even the possibility of an environmental disaster in Kyrgyzstan, they will be barred from entering new facilities in other countries.

So, what kind of new «study of the issue» of Kumtor’s compliance with environmental requirements are they talking about, if everything was discussed dozen, if not hundreds of times?

At the invitation of the government of Kyrgyzstan and Kyrgyzaltyn OJSC, the international independent organization AMEC periodically, from 2013 to 2017, assessed the geotechnical and environmental aspects of the activities of Kumtor company. Based on their results, AMEC experts have developed 20 recommendations, 19 of which have been implemented by Kumtor Gold Company to date. One recommendation is in the process of implementation.

In general, the independent consultants noted that «Kumtor mine is operating in accordance with international best practices.»

Why do we once again bother foreign investors, who are creating tens of thousands of jobs in the country? At the same time, both the government program and the president’s speeches emphasize that restoration of the previous economic growth is possible with a qualitatively new approach to investors.

It seems that there is nothing qualitatively new in such commissions, on the contrary, only well-forgotten old. Probably, the majority of Kyrgyzstanis, deep in their hearts, know perfectly well what the real purpose of such commissions is, and this has little to do with real concern for the environment.