Kyrgyz revolution unlikely to affect Kumtor – Centerra
As Kyrgyzstan erupted into violence, Toronto’s Centerra Gold does not yet see cause for alarm at its Kumtor gold mine.
Posted: Thursday , 08 Apr 2010
RENO, NV -
Centerra Gold officials say they are not worried about the impact of the latest Kyrgyz revolution on their Kumtor gold mining operations in Kyrgyzstan.
After all, the largest western gold company operating in Central Asia, Toronto-based Centerra previously survived the Tulip Revolution of 2005, in which the now ousted Kyrgyz President Kurmanbek Bakiyev first came to power.
However, many of the president's former allies now accuse Bakiyev of corruption.
Centerra Vice President John Pearson told Mineweb Wednesday Centerra's majority shareholder state-owned Kyrgyzaltyn JSC is an entity protected by the nation's constitution, the Kyrgyz Parliament and the country's judicial system no matter which party is in power. The Kyrgyz Government holds 33% of the Kumtor.
Former foreign minister Roza Otunbayeva told the news media late Wednesday that new defense and interior ministers have been appointed in the wake of riots which left at least 65 persons dead and perhaps as many as 100 were killed. President Bakiyev has flown out of the capital, Bishkek.
The nation's health ministry said at least 400 people were taken to hospitals as a result of the violence.
The woman known as the Thatcher of Kyrgyzstan, Otunbayeva, who will probably head the new government, said the interim government would remain in power for six months and draw up a new constitution. She told the news media she would allow the Manas military base to keep operating. The country recently increased the price of rent for the base from $17 billion to $60 billion after threatening to evict U.S. troops a year ago.
The U.S. Government also agreed to give Kyrgyzstan $51.5 million to combat drug trafficking and terrorism and promote economic development. The Kyrgyz people are primarily Moslem.
The now ousted government is suggesting that Moscow was behind the uprising. However, Russian Prime Minister Vladimir Putin denied any involvement in the turmoil.
Kyrgyzstan has been stuck in a tug-of-war between the U.S., which has the Manas military base in the area that supplies U.S. troops in Afghanistan, and Russia which wants to kick the American military out of the former Soviet territory. During a press conference Wednesday, Putin said Bakiyev had made many mistakes since he came to power during the Tulip Revolution. He also accused Bakiyev of appointing a number of family members to top government posts.
The riots were believed to have been generated over a 200% increase in electric and heating bills. Considered one of the poorest of the former Soviet Republics, many of Wednesday's protestors were men from poor villages. Unrest was reported in Bishkek, Talas, and the city of Naryn where some 5,000 protestors installed a new governor. In Talas, Kyrgyz First Deputy Prime Minister Aklybek Japarov and Interior Minister Moldomusa Kongantiyev were badly beaten, London's Daily Mail reported.
Wednesday's developments reminded many in international circles of the Tulip Revolution which happened five years ago. The think tank Eurasian Home suggested the "current round of protests are the result of increased authoritarianism of the incumbent regime and regional exclusion.'
Alisher Khamidov of the School for Advanced International Studies at John Hopkins University in Washington noted, "Growing corruption, nepotism and usurpation of economic and political power in the hands of a small circle of people not only alienated powerful elites but also broader segments of Kyrgyz society."
The crucial difference between the two revolutions, Khamidov asserted, is the current protests are triggered by simmering anger at the grassroots level. "Whatever the outcome, it is clear that Kyrgyzstan has plunged into a deep chaos. It will take months, if not years to recover from this."
However, Alexandros Peterson, senior fellow with the Eurasia Center at the Atlantic Council, said, "The leading opposition figures are not anti-American or more pro-Russian that anyone else in Kyrgyzstan..."
Meanwhile, Centerra's Pearson downplayed the potential impact of the change on Kumtor, which is located in a remote region of the country not generally touched by political protests. Pearson said there has been no impact on the ability to move people and supplies to the mine. Kumtor produced 525,042 ounces of gold last year and is expected to yield between 520,000 to 560,000 ounces this year.
Investors, however, did not share Pearson's assessment of the situation as Centerra shares dropped 11% or C$1.55 in trading to close at C$11.99 even though gold jumped to a 12-week high.
In an e-mail Wednesday to Mineweb, Centerra CEO Steve Lang said the company will issue a formal statement today regarding the situation.