BISHKEK (TCA) — More than two thousand licenses for the right to explore and develop mineral deposits have been issued in Kyrgyzstan but no more than 10% of them are active. Each year, about 200 companies coordinate their mining development programs and plans, Chairman of the Central Committee of the Mining and Metallurgical Union of Kyrgyzstan Eldar Tajibaev said.
This is due to a deficiency or lack of finance the mining companies face, politicization of the industry, and prevention of the companies’ activities by “various forces,” as well as shortcomings in the mining legislation and lack of coordination in the state bodies.
The Eti Bakir Tereksay company that won the tender for the right to use the Tereksai gold deposit in the Jalal-Abad Province in the south of Kyrgyzstan cannot start production due to inconsistency of the state bodies supervising the industry. It turned out that about half of the license area is located in a protected natural territory.
The Altynken LLC now faces problems with financing and a risk of stopping production due to the absence of permits for the export of auriferous concentrate. The company is developing the Taldy-Bulak Levoberezhny gold and copper deposit in the Chui province, 120 kilometers east of Bishkek.
Other mining companies are also facing problems, Tajibayev added.
The launch of new mining companies and stabilization of operating companies’ activities could help achieve significant growth in the economy.
Significant debts
The Altynken LLC has sold copper-gold concentrate for $3 million, KyrgyzAltyn (Kyrgyz state gold company) Chairman Almaz Alimbekov said at a visiting session of the parliamentary Committee on Fuel and Energy Complex and Subsoil Use at the Taldy-Bulak Levoberezhny deposit on September 23.
There was a problem during the commissioning of the plant, because when the company started processing the ore, gold recovery percentage was 66%. Under the license agreement, the extract percentage should not be less than 80%, otherwise the production is unprofitable, and the State Committee for Industry, Energy and Subsoil Use shall be entitled to cancel the license.
The company’s management started looking for ways to increase gold extraction. The problem is that Taldy-Bulak Levoberezhny contains copper and dispersed gold. To extract 80% of gold, it is necessary to increase the consumption of cyanide at least fivefold, and then environmental problems would arise.
The company has managed to improve the percentage of gold up to 77%, but there is no cost-effective and environmentally friendly technology for the processing of copper-gold concentrate in Kyrgyzstan.
Over time, while the company was developing a new technology, significant debts on taxes, social contributions and salary have accumulated. To pay off the debt, the company decided to sell 1,170 tons of copper-gold concentrate worth $3 million. To maintain the company, $4.9 million per month is required. The Altynken LLC debt is now $17 million.
The company has addressed research institutions of Kazakhstan and Russia to find a technology that will allow increasing gold recovery to the Dore bullion.
The Altynken LLC is owned by a Chinese company (60%) and the state owned Kyrgyzaltyn JSC (40%). Initially, a joint venture with a Kazakh company, SUMMER Gold, was created with a 40% share of Kyrgyzaltyn. In 2010, the Kazakh investor sold its 60% share to the Chinese company. Since 2011, within three years, a plant was fully built and launched into operation.
Background
On September 20, members the parliamentary Fuel and Energy Complex and Subsoil Use Committee decided to study the situation on the ground at Taldy-Bulak Levoberezhny, to find out why the Altynken LLC is still exporting gold concentrate to China. The construction of the gold processing plant has already finished but the company continues exporting concentrate to China.
At the end of the visiting session on September 23, the MPs concluded that Altynken should work without stopping. The MPs decided that technology problems should be solved within eight months and then the company should start processing concentrate in Kyrgyzstan.
Concentrate export legal
Earlier this month, MP Omurbek Babanov suggested introducing a duty on the export of gold concentrate from Kyrgyzstan. The country exported 235,000 tons of gold concentrate in 2014 and 2015, he said. Other countries buy ore from Kyrgyzstan, process it and make a profit. According to the MP, it is necessary to change the laws and introduce export duties.
Director of the State Committee for Industry, Energy and Subsoil Use Duyshenbek Zilaliev explained to the MPs that concentrate export is legal, although it would be better to process it inside the country. According to the rules of the Eurasian Economic Union, Kyrgyzstan may export to third countries raw materials processing of which is not possible inside the country.
Available technological capacities of the mining industry do not allow processing of all kinds of complex ores and concentrates of precious metals mined in Kyrgyzstan. In addition, there is the environmental issue, as the country has no place to dispose of toxic waste, Zilaliev added.
In Kyrgyzstan, eight companies export gold. According to Zilaliev, 340 companies have obtained licenses for the extraction of gold, of which 63 licenses were issued for mining, 155 for exploration, and 122 for mineral exploration. 37 companies have the rights for operation, 14 of which have already begun developing deposits, including eight gold companies that export gold.
