Investing.com - Financial Markets Worldwide

Strikes at Kumtor Mine Take a Toll on Kyrgyzstan's Economy

ByGoldMoney News Desk
Published 02/15/2012, 11:23 PM
Updated 05/14/2017, 06:45 AM
GC
0.25%
FTNMX551030
0.44%

Kyrgyzstan's economy is being hurt by strike activities at its largest mine. Ever since it started operating in 1996, local supporters and opponents of the Kumtor mine have not been able to reconcile their disagreements. Now the country's government is trying to end these strikes by negotiating with the miners’ union, in the hope that Centerra Gold – the Canadian company operating Kumtor – might restart gold production as soon as possible.

Production at the mine has been on hold since February 6, and Kyrgyzstan's economy is suffering the consequences. Last year the Canadian mining company Centerra Gold contributed 11.7% to the country's GDP. Furthermore, in 2011 production at Kumtor accounted for 26.1% of Kyrgyzstan's industrial output. The dispute is escalating, and the government is urging striking workers to find a quick solution to the problems. The government in Bischkek cannot remain passive, as it depends heavily on the licensing fees and tax revenues from the mine.

Ever since the mine started operating in 1996, supporters and opponents of the mine have been in constant dispute. Opponents among local residents have repeatedly focused on the environmental damage done by the mine. However, the government relies heavily on tax proceeds from Kumtor to finance its expenses. Thus, an escalation of striking activities among mine workers is not in the government's interest.

According to Centerra Gold's management, the mine still has enough extracted ore to keep operating its stone mill. Unless some quick solution enables the mine to restart its operations, the drop in industrial production and the losses in licensing fees and tax revenues could take a strong toll on the country's economy. Despite this hickup, experts believe that Kyrgyzstan has great gold mining potential.

Latest comments

Loading next article…
Install Our App
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2025 - Fusion Media Limited. All Rights Reserved.