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Kyrgyzstan gold under investigation

Thursday, June 30, 2011 - 02:21

June 29 - Kyrgyzstan's treasured gold mine Kumtor, is facing a government investigation which is sounding alarm bells for foreign investors. Ciara Sutton reports.

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Kumtor gold mine is the crown jewel in the Kyrgyzstan economy. Last year it accounted for nearly 10 percent of the country's GDP and almost half its industrial output. But it's now facing a government investigation and there are suggestions it may be nationalised. The mine is owned by Centerra Gold - an offshoot of Canadian miner Cameco Corp. It's Vice President of Investor Relations John Pearson says the company welcomes the investigation and has nothing to hide. SOUNDBITE) (English) VICE PRESIDENT INVESTOR RELATIONS CENTERRA GOLD JOHN PEARSON, SAYING: "We're very transparent here, open and they'll have all access to all the data. We're operating currently under the new terms agreement which was signed in 2009, which resulted in the increase of the Kyrgyz Republic's ownership in Centerra to the 33 percent level." Centerra pays 13 percent of Kumtor's annual revenues to the state in tax and another one percent into a regional development fund. It also runs a successful micro-credit scheme for local villagers and funds a fruit-processing plant which makes puree for juice from local apples and apricots. But Kyrgyzstan's new government says that's not enough. It plans to introduce new laws to secure a larger share of the profits - accusing previous regimes of plundering the country's resources. (is that right?) . That's making Kumtor's 2700 employees nervous. (SOUNDBITE) (Russian) MECHANIC MURATKUL SULAIMANOV, SAYING: "The political situation in Osh is alarming - all the people working here are worried about their jobs. Every worker at Kumtor values their work." The situation at Kumtor is also sounding alarm bells for other foreign mining companies. They'd hoped the parliament formed last October would bring democracy and improve the investment climate. With around 100 gold fields still untapped, the country is ripe for a mining boom. But clearly change in the region won't be easy. Last year Kyrgyzstan was ranked near the bottom of the Corruption Perceptions Index, level with the Democratic Republic of Congo. And hundreds were killed in the revolution which brought about the new government. Many hoped it would lead to a fairer and more democratic society. But as the investigation gets underway at Kumtor those hopes - for some - are now fading. Ciara Sutton, Reuters

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Kyrgyzstan gold under investigation

Thursday, June 30, 2011 - 02:21