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New shades of Kyrgyz gold

The authorities of the republic finally realized how important it is to support large investors investing in the development of the economy. The government of Sapar Isakov seems to have serious intention to eliminate the main problem facing official Bishkek — the lack of resources necessary to launch important projects.

Good news is pleasant for shares either

A few days ago, the Cabinet announced the conclusion of new agreements with Centerra Company, which is developing the Kumtor gold mine. As the first and solid bonus, Kyrgyzstan received over $ 92 million. The value of the portfolio of shares owned by the republic in an international company has grown for this sum. The stock price climbed up, reacting to positive news about the future fate of the largest gold mine in the Tien Shan.

If on September 5 the value of each share of Centerra placed on the Stock Exchange in Toronto was $ 6.05, today it rose to $ 7.24, having risen by almost 17.22 percent.

The portfolio of the Kyrgyz side is estimated at $ 560.18 million, and, according to forecasts, growth will not stop there.

Provided, of course, that the government of Kyrgyzstan will fulfill its obligations, in particular, will refuse to continue litigation with the investor.

Millions for ecology

The new agreements mainly involve the strengthening of environmental measures related both to the work of Kumtor and to the situation in Issyk-Kul region as a whole. The investor agreed with the proposal to increase environmental payments almost tenfold — from $ 310,000 to $ 3 million per year. The company, in addition, is ready to allocate $ 50 million for the creation of the Foundation for the Development of Nature.

Using these funds, the government promises to finance environmental protection measures in the water area of Issyk-Kul region.

The government plans to send money of the investor for the modernization or construction of new treatment facilities in major cities on the coast and in the resort area.

Thanks to an agreement with the investor, the government, according to experts, can kill several birds with one brick. First, to save budgetary funds necessary for costly environmental activities. That is, in fact, thanks to the gold mining company, the authorities will solve the large-scale infrastructure problem associated with the development of the tourism industry in Issyk-Kul.

Secondly, Kyrgyzstan will be able to keep the unique lake clean, which, again, is important for attracting new tourists and preserving the already existing flow of tourists. Thirdly, the republic will significantly improve its image. And as in the eyes of investors, who watched with anxiety the development of the situation around Kumtor, and the world community, which attached great importance to ecology.

Gold contribution to economy

How important it was to achieve settlement of disputes can be judged by the fact that Kumtor remains the main and most significant private investment project in the economy of the republic. It provides up to 10 percent of GDP and has a huge impact on the situation in the country.

According to the National Statistics Committee, in January-July, the work of the gold mining company ensured the growth of the country’s gross domestic product by 3.3 percent.

Thanks to this, the economic development reached a record 6.9 percent in recent years, and the industrial sector directly - 32.69 percent.

Enviable growth is connected with the fact that the mine has increased the volume of gold production. Since the beginning of the year, about ten tons of precious metal have been mined here. This, in its turn, increased the indicators at the republican level. Kyrgyzstan managed to significantly increase the supply of gold abroad — by almost 41 percent.

Precious metal remains the main export commodity of the republic. It doesn’t need certification, as in the case of agricultural products. Kyrgyz gold is really valued abroad. Moreover, the government needs to do everything in its power to not lose this export item, as it provides a steadily growing income.

World demand for gold and chance of Kyrgyzstan

In recent years, recall, the cost of gold in the world market is almost constantly growing. Analysts explain this by the desire of big business to find a quiet harbor, to preserve and multiply the accumulated capital. And the more negative events occur in the world, the more business circles pay attention to such an asset as gold, while interest in global currencies is reduced.

The growing demand for precious metals also ensures the desire of large developing countries to increase international reserves. Gold in large lots is bought by Russia, China and a few other states that are going to leave the unsecured dollar.

Given the close ties of Kyrgyzstan with both the PRC and Russia, the republic could take a unique niche. But everything depends on the actions of the government.

Meanwhile, the Cabinet of Ministers is laying the groundwork for obtaining new dividends. Now — in the investment market. Many experts are inclined to believe that the resolution of the controversial situation around Kumtor gives an obvious and positive signal to big business. The authorities showed that they are interested in cooperation with big business, they learned to defend the interests of the state in a civilized way and are ready for compromises.