Kyrgyzstan: Forum helps local suppliers find partners in mining business

BISHKEK (TCA) — The first Forum of suppliers of goods and services for the mining industry of Kyrgyzstan was held in Bishkek on June 27.

It was not a traditional meeting when all the invitees are sitting in the hall while speakers perform reports in a planned manner.

Establishing B2B contacts

During six hours, the ten largest mining companies, including KAZ Minerals Bozymchak, Kumtor Gold Company, Altynken and Highland Exploration, and 28 supplier companies from various sectors of the economy established B2B contacts and concluded preliminary agreements in several halls of Hyatt Regency Bishkek.

In front of the hotel, the companies demonstrated modern heavy mining equipment including excavators and bulldozers, while inside the hotel there were representatives of the largest subsoil users and local suppliers.

Subsoil users explained the procurement procedures to suppliers and answered their questions. Suppliers presented their products and services at stands and in presentations.

Along with suppliers of direct goods and services such as design, exploration, testing, drilling and blasting, the exhibition also included related services — food supply, workwear, lighting equipment and much more that can be purchased in the country.

Askar Sydykov, Executive Director of the International Business Council (IBC) based in Bishkek, told how the idea of holding the forum appeared.

“Suppliers of goods and services often turned to IBC with a request to acquaint them with purchasers, and not only for the mining industry, but also for other sectors of the economy. We decided to bring together suppliers of goods and services in one place to help them establish contacts for further joint projects,” the IBC head explained.

Lack of information

The cooperation often fails due to the lack of information. For example, not everyone knows that the country produces materials for mining and recycles industrial waste. Subsoil users do not always have information on where and what purchases can be made in Kyrgyzstan. At the same time, they are ready to buy more from local companies and enterprises.

“Recently, the mining industry has been developing rapidly in our country, and the need for services is increasing. We support the initiative to ensure that as many local companies operate in Kyrgyzstan. The more local people work, study and develop, the less problems with local communities will investors face,” said Aigerim Omokoeva, Executive Director of the Aji Service LLC that provides special equipment and other services for the mining industry.

The main activity of the company is blasting and sale of explosive materials for industrial explosions. “In terms of safety, we have a great responsibility towards people and comply with all international and local safety and environment standards,” she added.

Efficiency of local suppliers could be improved if local companies are given open access to tenders.

“Kyrgyzaltyn (Kyrgyz Gold) state enterprise’s information about tenders is the only source for us to participate in tenders. We learn about tenders through our colleagues, geologists, who have been working in the industry for a long time,’” Omokoeva said.

How to become a Kumtor supplier

Kumtor Gold Company repairs more equipment and purchases more spare parts at local enterprises, KGC President Daniel Desjardins said at the forum. Every year, the company spends at least $300 million for local purchases.

Kumtor Gold Company is known for its large-scale contribution to the Kyrgyz economy and for being the largest buyer of goods and services in Kyrgyzstan.

Over the past three years, the company’s purchases of goods and services in the local market have increased by 37% and reached 5.65 billion soms.

At the forum, the company’s representatives spoke in detail on how to become a Kumtor supplier. The company gives preference to enterprises in which citizens of Kyrgyzstan are the main owners and, to the extent possible, support enterprises located closest to the mine.

The company buys more than 11,000 product items from about 600 local enterprises.

The company fully buys domestic food products in the local market and cooperates with local IT companies.

At the mine, there are always about 1,800 employees every day who need to be provided with meals. Local suppliers currently fully satisfy this demand.

The company also buys production equipment from Kyrgyzstan’s suppliers including grinding balls for mills, equipment and spare parts for it.

The company constantly needs equipment repair and it is important that these services are performed with the help of local companies.

Kumtor’s cooperation with the service center for the maintenance of heavy mining machinery and equipment in Balykchy in the Issyk-Kul oblast is effective. This enterprise was opened by Kyrgyzaltyn state enterprise and Borusan Makina Kazakhstan, the Caterpillar official dealer.

Earlier, the company was forced to repair Huge engines of the haul trucks in the USA, and now it is being done in Balykchy. This is beneficial not only for the company, but also brings great benefits to the local community. Caterpillar teaches local professionals to repair equipment.

Waste recycling

Few people know that worn car tires can be recycled in Kyrgyzstan. Ihsan Eco Group is the only company in the country that deals with the disposal of old tires and toxic and radioactive waste. The company also utilizes waste oil and oil filters.

In recent years, air pollution has become one of the most discussed topics in Bishkek, especially in winter when a shroud of smog covers Kyrgyzstan’s capital. Local residents often use old car tires as fuel to heat their homes, which, when burned, form dark fetid smoke.

Used rubber tires can lie for centuries. They do not rot and do not disappear on their own without technical recycling. Materials obtained after processing scrap tires are used in the manufacture of plates, rubber coatings for football fields, playgrounds, sports equipment, and for building insulation. Production of the company is almost waste-free, Ihsan Eco Group financial director Abdullabek Rakhmanov said.

The company operates using modern equipment, and it is ready to create new enterprises in the regions and completely solve the problem of tire recycling in Kyrgyzstan. The company produces about 30 tons of recycled materials per day and plans to increase production up to 50 tons by the end of this year.

This year, the company has entered into a contract with Kumtor and picks up large-sized worn tires, waste oil and air filters for further processing and disposal.

High requirements

In Kyrgyzstan, many goods and services are produced, but they are not always of the quality that purchasers want.

Providing production with goods and services at the best prices and quality, while giving preference to local companies, is among bona fide mining companies’ goals.

They are ready to increase the share of locally produced goods and services without compromising cost, quality and safety. This will lead to an increase in jobs in the country and will enable local enterprises to develop their activities not only in Kyrgyzstan but also in international markets.

Many suppliers want to cooperate with Kumtor but few can meet the requirements and withstand the competition. According to KGC purchase department, the company is open for cooperation but only if the partners work honestly, transparently and strictly comply with the legislation of Kyrgyzstan and the terms of contracts.

The suppliers of goods and services of Kyrgyzstan are faced with the task of showing the investment attractiveness of the mining industry, competitiveness, high quality and standards of ethical behavior. Only in this case, large enterprises will be ready to cooperate with them and help in development and expansion.

The forum will stimulate local suppliers to develop in order to offer high quality goods at affordable prices to potential partners, as well as demonstrate the transparency of procurement procedures and build a permanent dialogue between all stakeholders.

The forum participants agreed that such events are necessary not only in the mining sector but also in other industries.