Tag Archives: metals and mining

Mine brawl leaves injured people in Kazakhstan

JUNE 17 2016 (The Conway Bulletin) – A brawl between private security guards and miners in Bestobe, a village 200km north-east of Astana, left as many as 16 people injured, highlighting a worsening labour dispute at the mine. Private security guards working for Kazakhaltyn, owned by Netherlands-based Institute Project, forcefully broke up a short-lived demonstration. Many of the miners said the incident echoed Zhanaozen, scene of violent clashes between police and oil workers that left at least 17 dead in 2011.

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(News report from Issue No. 286, published on June 24 2016)

Chaarat receives extension from Kyrgyz government

JUNE 21 2016 (The Conway Bulletin) – British Virgin Island-registered Chaarat Gold said it received a two- year extension from the Kyrgyz government to present results for a gold mine it is exploring in north-west Kyrgyzstan. Now, Chaarat has to present a detailed development proposal for the mine by the end of 2018. The company completed a feasibility study for the mine, Chaarat’s only asset, in February.

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(News report from Issue No. 286, published on June 24 2016)

Kyrgyzaltyn changes board composition

JUNE 17 2016 (The Conway Bulletin) – Kyrgyz state-owned miner Kyrgyzaltyn said in a note that it had changed the composition of its board. Askar Oskombayev, adviser to the PM, will now serve as chairman, replacing Duishenbek Kamchybekov. Kyrgyzaltyn owns 32% of Canada’s Centerra Gold, which owns and operates the Kumtor gold mine in eastern Kyrgyzstan. Centerra and the government are currently embroiled in a legal battle to resolve disputes over ownership of the gold mine.

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(News report from Issue No. 286, published on June 24 2016)

Polymetal gets loan for its Kazakh project

JUNE 15 2016 (The Conway Bulletin) – Russian miner Polymetal said it reached an agreement with Sberbank for a $350m loan to finance the start-up of its Kyzyl project in north-eastern Kazakhstan. In 2015, it bought the Kyzyl project for $620m from Sumeru, a private group owned by Timur Kulibayev, son-in-law of Kazakh President Nursultan Nazarbayev.

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(News report from Issue No. 285, published on June 17 2016)

Kyrgyzstan accuses Centerra of corruption at Kumtor

BISHKEK, JUNE 14 2016 (The Conway Bulletin) — Kyrgyz President Almazbek Atambayev instructed state prosecutors to investigate agreements signed by Canadian miner Centerra Gold in 2003-04, after corruption charges emerged against both Centerra and former officials at the state-owned Kyrgyzaltyn.

Earlier this week, the country’s security service said that Dastan Sarygulov, the 69-year-old former head of Kyrgyzaltyn from 1992 to 1999, had been charged with plotting a coup earlier this year and taking bribes in the 1990s.

The charges appear to be based on accusations made last week by Len Homeniuk, former head of Centerra and Kumtor Gold, who sent a letter to Kyrgyz prosecutors alleging corrupt practices that had involved the miner over its entire lifetime, explicitly naming Mr Sarygulov.

In the letter, Mr Homeniuk said that the companies he headed were regularly asked for bribes by Kyrgyzaltyn, which owns a 32% stake in Centerra.

“[Their requests] were sometimes very significant, more than $200,000 in a given month,” Mr Homeniuk wrote. “Dustan Sarygulov and Kamchybek Kudaibergenov always explained such requests that they were under pressure by the office of the President.”

Centerra, Kumtor Gold and Kyrgyzaltyn have not commented on the allegations.

The revelations seem to be well- timed for Kyrgyzstan.

Sarygulov was already under house arrest, accused of having participated in the coup plot.

Now, analysts say, the Homeniuk letter could be a powerful tool for Mr Atambayev to both discredit his predecessors and taint Centerra’s record in Kyrgyzstan, just as it prepares an arbitration case in Stockholm against the government for blocking its business development.

“Timing is important. Homeniuk’s revelations seem a gift to Mr Atambayev now,” Mars Sariyev of the Institute of Public Policy, a Bishkek-based think tank, told The Bulletin.

Centerra owns the Kumtor Gold Company, which operates the country’s largest gold mine, which accounts for around 7% of Kyrgyzstan’s GDP.

In March security forces raided the office of Kumtor in Bishkek looking for evidence of financial wrongdoing. Centerra has said that Kyrgyzstan is using heavy-handed tactics to try and claim more direct ownership of Kumtor.

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(News report from Issue No. 285, published on June 17 2016)

Business comment: Gold in Central Asia

JUNE 17 2016 (The Conway Bulletin) – Gold prices climbing up towards $1,300/ounce, but not everyone in the mining sector in Central Asia is happy.

In Kazakhstan, Russian miner Polymetal received a much-needed lifeline from Sberbank to push forward with its Kyzyl project in north-eastern Kazakhstan. The gold sector in Kazakhstan is enjoying a positive season, as production numbers in the country are up 3.7% to 13 tonnes of fine gold in the first five months of the year, compared to Jan.-May 2015.

The steady growth is paired with increased investment, as Polymetal is focusing its growth outside Russia on Kazakhstan and Armenia.

But this year has not brought only good news in Kazakhstan. In March, Alhambra Resources said it was seeking damages against Kazakhstan’s government, via the World Bank’s International Centre for Settlement of Investment Disputes, for the bankruptcy of its Kazakh subsidiary.

Recovering commodity prices, however, can do little to improve the mood in Kyrgyzstan, where Centerra Gold and the government are increasingly entangled in what could become a decisive legal battle.

Centerra sought the resolution of the continuous fines and corruption probes at the Stockholm court of arbitration.

The Kyrgyz government responded with more fines and charged a former director of Kyrgyzaltyn — which owns a stake in Centerra — of taking bribes from the Canadian miner.

These charges, fuelled by allegations from a former Centerra director, would make the Canadian company guilty of paying bribes, serving an order to the government, which is trying hard to show Centerra under a bad light.

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(News report from Issue No. 285, published on June 17 2016)

Kyrgyz Prosecutor imposes ban on Centerra manager’s travel

JUNE 6 2016 (The Conway Bulletin) — Canadian miner Centerra Gold said Kyrgyzstan’s Prosecutor has imposed a temporary ban on travel for some unnamed managers at the Centerra-controlled Kumtor Gold Company. The Kyrgyz government has not commented. Last week Centerra said that it had started arbitration proceedings against the Kyrgyz government in Stockholm for hindering its business in various ways.

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(News report from Issue No. 284, published on June 10 2016)

Tajik-Chinese JV produces first gold at mine in Tajikistan

DUSHANBE, JUNE 6 2016 (The Conway Bulletin) — A Chinese-owned mine has produced its first gold in Tajikistan, highlighting the growing influence and importance of China in the Tajik precious metals sector.

Another Chinese gold mining company, though, was accused of trying to dodge paying an environmental fine, a reminder of the complexity of business in the region.

Tajikistan’s government said Pokrud LLC, a Chinese-Tajik JV involving the China National Metallurgical and Mining Company mine, had held a licence to develop a mine 20km east of Dushanbe since 2003. Only far more recently, though, has work started on exploiting it.

Official news outlets quoted the visiting President Emomali Rakhmon as saying that investments to date in the mine totalled $256m. The Pokrud mine will produce around 1.3 tonnes of gold per year, giving the gold sector in Tajikistan a decent boost. It currently produces around 4 tonnes of gold per year.

At the other end of the spectrum, Chinese miner Zijin Mining, which operates the Zarafshan mine in the north of the country, was at the centre of a corruption probe this week.

Tajikistan’s anti-corruption agency, headed by Mr Rakhmon’s son, Rustam Emomali, said the company had finally paid off a 13.4m somoni ($1.7m) penalty for environmental damage owed since last year. He said that two of Zijin Mining’s managers had tried to dodge the payment by allegedly forging official documents. The two managers are now under investigation.

Zijin Mining bought a 75% stake in Zarafshan from Britain’s Common- wealth and British Minerals in 2007. Zarafshan is Tajikistan’s biggest gold mine.

The majority of the largest gold mining projects in Tajikistan are part- owned by Chinese companies. Tajikistan is looking to gold production, with Chinese help, and electricity exports to boost its GDP.

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(News report from Issue No. 284, published on June 10 2016)

Stock market: Central Asia Metals share price prospects

JUNE 10 2016 (The Conway Bulletin) — Analysts in London are positive about copper producer Central Asia Metals, despite its shares hitting 144.5p, the lowest level in four months, on Thursday. It had traded at a high of around 170p.

Canaccord Genuity set a price target of 190p, in line with the majority of analysts who rate it a “buy”.

Central Asia Metals is a Kazakhstan-based copper producer, which had recently seen its share price rise after announcing positive results for 2015 and saying that its ambitious expansion was on schedule. Kenes Rakishev, a powerful Kazakh businessman and son-in-law of defence minister Imangali Tasmagambetov, is Central Asia Metals’ largest shareholder with 19%.

Other shareholders own 10% or less in the company. Mr Rakishev has actively diversified his investment portfolio in recent years buying Kazakhstan’s largest bank, Kazkommertsbank, and acquiring a minority stake in a discount retail chain.

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(News report from Issue No. 284, published on June 10 2016)

Centerra sues Kyrgyzstan

BISHKEK, MAY 30 2016 (The Conway Bulletin) — Centerra Gold, the Toronto-listed company that owns the Kumtor gold mine in east Kyrgyzstan, lodged arbitration proceedings against the Kyrgyz government, pushing their already-strained relationship to breaking-point.

The company laid out three areas for its litigation challenge. It said it would challenge both an environmental claim against it and a charge by the Kyrgyz prosecutor that a $200m dividend paid in 2013 was illegal. Centerra also said it suspected that a delay in gaining official approval for its 2016 mining plan was designed to frustrate it for political reasons.

“The company will continue to contest all of the claims in international arbitration in accordance with the 2009 Restated Investment Agreement,” Centerra said in a statement.

It filed the arbitration case with the Stockholm Chamber of Commerce, a favoured destination for dispute resolution for projects in Central Asia. Earlier this year, the Stockholm court ruled in favour of an Estonian building company against the Kazakh foreign ministry.

Centerra’s reference to the 2009 agreement refers to the renegotiation of the contract. This boosted Kyrgyzstan’s share in Centerra to 32% from just under 16%. Centerra, in turn, fully owns the Kumtor Gold Company that operates the mine.

Kyrgyzstan is the largest share- holder in Centerra but has said that it wants to take a larger, more direct stake in the country’s biggest industrial unit.

And it appears to have been applying pressure on Centerra to force the issue. In March, Kyrgyz police raided the Kumtor Gold offices in Bishkek, looking for evidence of wrongdoing.

And a court in Bishkek has also been slapping down fines against Kumtor Gold over environmental damage and the government has delayed signing off on 2016 production plans.

This appears to be the start of a showdown in Kyrgyzstan’s mining sector. Once proceedings begin, lawyers and prosecutors, managers and ministers will confront each other in a legal battle that will ultimately decide control of the Kumtor mine and Kyrgyzstan’s economic output. Kumtor generates around a tenth of Kyrgyzstan’s GDP.

Investors also appeared to cheer the arbitration move by Centerra Gold’ pushing its share price up by 1.6% the day after the announcement to 6.86 Canadian dollars.

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(News report from Issue No. 283, published on June 3 2016)