In a statement issued last week, on the occasion of his country reestablishing full ownership over Kumtor gold mines, one of the largest gold mines in Central Asia, Ambassador of Kyrgyzstan H.E. Karagulov Azamat said the return marked a new phase in the development of the country and its economy,
Elaborating on the return of ownership, the ambassador noted that the return followed an agreement reached between his country and the Canadian-based gold mining company, Centerra Gold, that operated the mine. The state had been locked in a global legal dispute with the company, which has been operating the mine located in the Issyk-Kul Region to the north-east of the country. The decision to reach a mutual agreement would allow both sides to move on forward, said the ambassador.
In this regard, Ambassador Azamat referred to the speech made to the nation by the President of the Kyrgyz Republic, Sadyr Japarov, on the occasion of the return of full ownership. In his address, President Japarov stated: “On 4 April, the Kumtor gold mine has been completely and irrevocably returned to our Motherland.
“It is no exaggeration to say that today is a true turning point in the history of our country. Today our people have taken responsibility for their fate into their own hands. Our national assets are now exactly where they should be — in our own hands. This proves that we are on the path of sustainable development and growth.
“Now, please allow me to tell you some of the main points of the Agreement.
From now on, Kumtor mine will be fully owned by Kyrgyzstan. ‘Kumtor Gold Company’ is 100 percent owned by our country.
“We were able to define the full transition period of the mine as starting from the date of the introduction of external management in May last year. Thus, we were able to obligate that all parties officially recognise all revenues from 15 May 2021 as our property .
“Furthermore, ‘Centerra’ is required to pay us dividends of US$11 million for the first three quarters of the last year, and must also make a one-time payment of US$50 million to Kyrgyzstan. This is a significant achievement.
“We have also regained full control of the Kumtor Reclamation Fund, which means a further US$53 million will be coming back to Kyrgyzstan. These funds were previously held in a trust account with a London bank.
As regards ‘Kyrgyzaltyn’ the Open Joint Stock Company, it will hand over its 26 percent stake in Centerra. At the same time, Centerra will cover all tax payments related to the transfer of the rights to the specified equity interest in accordance with Canadian law at its own expense. Centerra will also end all litigation and other claims against Kyrgyzaltyn in the United States, Sweden and Canada.
“From our side, we have agreed to withdraw all our lawsuits and other claims against Centerra. This was not an easy agreement to reach. It has taken us a year to reach a decision on each of these issues.”
The president went on to note: “Given the current world crisis and its impact on our own country, I can assure you that the terms of this agreement are the best possible and in favor of our national interest.
“As you know, litigation and international arbitration can take many years. An attempt to secure better terms would have cost us at least another five years and tens of millions of dollars. It could even have dragged on for seven or eight years.
“And there would be no guarantee that positive decisions would be made in our favor. We could have wasted money and, most importantly, precious time.
If it had dragged on, we would have been deprived of major investment projects. Indeed, before the arbitration proceedings were over, we risked losing international confidence and investment in the country, and we would have lost both money and goods.”
Pointing out that the negotiations were extremely challenging, President Japarov added, “From the very beginning we stood firm — firmly for the interests of our state, and firmly to defend our position, because our priority was the interests of Kyrgyzstan.
“In the end, we achieved a radical shift in the demands made of us and the position we were forced into at the start of negotiations. Once again, we can say with confidence that we were able to achieve the optimal results for our country in the current climate.”
Highlighting the benefits to the country from the agreement, the president said: “I invite you now to consider what I mean when speaking about the benefits to us from this agreement.
“Up until now, we have only received symbolic annual dividends from Kumtor Mine. To be precise, over 20 years we have received a total of only about US$85 million. In contrast, in just seven months last year we made a profit of US$323 million from the mine. This year, we hope to earn US$500 million dollars.
The Kumtor mine is now valued at roughly US$3 billion. The book value of just the machinery and real estate is US$1.3 billion dollars. Looking ahead to the next 10 years, experts estimate the Kumtor mine will produce at least US$5 billion dollars from the 160-200 tons of gold expected to be mined. This is money straight into the national budget.
“And these are only the certified and guaranteed reserves. Even now we are exploring other possibilities and opportunities at the mine. But, we cannot go into details about these just yet. All I need to say is that the mine still has great, untapped potential and Kumtor will serve our people for many years to come.”
Concluding his address on a positive note, President Japarov stated: “Sadly, it has taken twenty years to reach where we are today. But we should not regret the past and I will not dwell on those who have stolen and squandered the wealth with which God blessed our people and land.
“But this is not the time to engage in meaningless confrontation or to argue over who is right and who is wrong. There is neither the time nor taste for that. I want us now to move forward as one people.
“In spite of all that has happened, we must take decisive strides forward. This is what we as people free in our own sovereign state must do. Our destiny is in our hands now and it is time to take responsibility for our future. Today’s decision on Kumtor mine is just the beginning of many more great accomplishments in the development and growth of our country.”
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