Kumtor: the gold mine that could make or break Kyrgyzstan
A nationalist government has recently taken over management at the mine situated in Kyrgyzstan's mountains, but will this have any effect on mounting concerns about environmental impact?
The southern shore of Issyk-Kul, a mountainous lake in northern Kyrgyzstan, is famous not only for its pristine nature, but also for the largest open-cast gold mine in the Central Asian state. Since operations started in 1997, on average approximately 17 tonnes of gold have been mined every year at Kumtor, which sits at 4,000 metres above sea level. In the words of one expert, Kumtor is the largest mining operation in the world that interferes with glaciers.
Kyrgyzstan’s new government, which came to power in the chaos that followed last year’s parliamentary election, has now revoked the mining license for the Canadian company, Centerra, which operates Kumtor. The government is demanding $3bn in compensation for the mine’s ecological damage.
This sudden interest in protecting the environment is unusual for Kyrgyzstan, where the authorities have previously chosen to ignore the problems.
But while locals remain divided over Kumtor, few today doubt the mine’s impact on the surrounding environment and, as a consequence, on the health of the population living nearby. Moreover, there is a genuine risk of significant environmental damage that could affect not only Kyrgyzstan, but Central Asia more broadly.
A chequered history
Kumtor has a long and twisted history. Exploration first started in 1978, but the Soviet state did not have the resources to bring it online.
After Kyrgyzstan gained independence, the Canadian corporation Cameco began developing the mine. At that time, the Kyrgyzstani state held a 67% interest in the mine, with Cameco holding the remaining 33%. But following a restructuring in 2003, Cameco’s and part of the state’s share went to a Cameco subsidiary, Centerra, diluting the state’s hold to 33%. Today, thanks to a series of ‘unprofitable’ agreements, Kyrgyzstan owns 26.4% of the shares in the mine – the largest industrial investment in the country.
Kumtor is responsible for 12% of Kyrgyzstan’s GDP, and 23% of its industrial output. More than 4,000 people work at the complex, and the majority are Kyrgyzstani citizens. According to a Kyrgyzstani state commission, the state has received $1.44bn in royalties and taxes from Kumtor, while Centerra has made $11.5bn.
Unsurprisingly, Kumtor has become a site of struggle – both in terms of political control and environmental concerns. Over the years, politicians have held multiple protests in support of nationalising the mine and keeping profits in the country. Their number includes Sadyr Japarov, the current president, who came to power amid street protests and a legitimacy crisis last autumn, and his allies, the head of state security Kamchybek Tashiev and parliamentary speaker Talant Mamytov.
While Kumtor has certainly contributed to Kyrgyzstan’s often stretched state budget, it has also become an urgent environmental problem. Mining at Kumtor is directly connected to damaging the surrounding glaciers, which in turn feed the Naryn river. Together with another river, the Karadarya, the Naryn forms the Syr Darya, one of the main river arteries in Central Asia that crosses Uzbekistan and Tajikistan, eventually flowing into the Aral Sea in Kazakhstan. Pollution or reduction of the river’s waters carry potentially catastrophic consequences for the whole region.
Specifically regarding glacier damage, Centerra states that its “operations and activities always carefully adhered to applicable laws and project agreements which were approved by the Kyrgyz Republic Parliament and Constitutional Court in 2009.”
The environmental damage at Kumtor has been known for a long time. Through the years, Kyrgyzstani parliamentarians have inspected the mine on multiple occasions. In 2012, for example, a state commission recommended that the environmental offset payments be raised, a new tailings dump be built, and a fine of roughly $79m. After long arguments, the state and mining company came to a compromise, and the fine was ‘forgiven’. In 2017, the government adopted new amendments to its water code, which, in effect, legalised mine production at two glaciers, Davydov and Lysy.
Relations between Kumtor management and the Kyrgyzstani authorities finally broke down after Japarov, the nationalist politician who was sprung from prison last October, became president in January. Parliamentary deputies convened a new state commission to inspect operations at Kumtor, which recommended a $5bn total payment over glacial erosion, unpaid taxes, interests and fines. Over the past 25 years, the commission’s report stated, 178m cubic metres of the Davydov glacier have been destroyed.
“The leadership of the Kyrgyz Republic has acted with astonishing speed since the beginning of this year to undermine the basis on which the Kumtor Mine has been operated”
In May, a court in Kyrgyzstan’s capital, Bishkek, ordered Kumtor to pay a $3bn fine for dumping mining waste on the glaciers and damaging them. Parliament then approved introducing state management at the mine for three months. With this news in the background, Centerra’s stock price fell by 30%.
“The leadership of the Kyrgyz Republic has acted with astonishing speed since the beginning of this year to undermine the basis on which the Kumtor Mine has been operated,” said Centerra Gold, which announced it was ready to “engage in a constructive dialogue with the Kyrgyz authorities”.
According to its website, the company “worked with the Kyrgyz government to develop annual mine plans, including for the disposal of waste rock. The government, including the state agency responsible for the environment, approved KGC’s mining plans and permits every year.”
Centerra has now filed an international arbitration lawsuit against the Kyrgyzstani government, claiming that the authorities’ actions were illegal. In addition, Centerra’s subsidiaries, Kumtor Gold Company and Kumtor Operating Company, initiated bankruptcy proceedings in New York. On 8 June, their applications were granted. According to the court ruling, these companies cannot be held criminally liable, they cannot be sued, and their property cannot be confiscated.
“We have always resolved differences in our relationship through negotiation and compromise,” the company said. “This time, we are concerned that the government is pursuing a premeditated effort to nationalize the Kumtor Mine or force Centerra Gold to give up ownership.”
At the culmination of this standoff, several Kyrgyzstani politicians were detained as part of a corruption investigation into Kumtor, including a former prime minister, Omurbek Babanov, as well as parliamentarians Torobay Zulpukarov and Asylbek Jeenbekov. (The latter is the brother of former president Sooronbai Jeenbekov.)
On the condition of anonymity, one Kumtor employee, Timur (name changed), told openDemocracy that Centerra management had seen this change in policy by the Kyrgyzstani authorities coming, and were prepared for the confrontation. “Gradually, they have assigned less and less money for operating expenses, and costs have been cut,” said Timur.
When contacted, Centerra responded that this assertion was “not true”, and pointed to a three percent increase in total operating expenses between 2019 and 2020 - and when combined with capital expenditures, a 17% increase between 2019 and 2020. “Due to the Kyrgyz government’s unnecessary actions,” the company said, “plans [...] announced earlier this year to invest an additional US$2 billion to extend the life of the mine are now on hold.”
“Over the past three years, all of our servers have been transferred to a repository located in the United States,” Timur continued. “After leaving Kyrgyzstan, [the company] remotely blocked access to programmes used to operate the mine. All the data was damaged, so specialists had to restore everything bit by bit.”
In an email to openDemocracy, Centerra stated that “all key safety, monitoring and operational systems at the mine were functioning properly” prior to the introduction of external management.
“When the government authorities seized the mine and attempted to access IT systems, including by seizing computers and passwords of individual Kumtor employees, Centerra Gold’s global IT systems restricted access from Kumtor to preserve the integrity of the Company’s global IT infrastructure and its confidential information. None of these systems are required to operate the mine safely,” the company said.
"Most employees, whether workers or line managers, aren’t sure of their future or what’s happening now. Everyone is pessimistic"
Speaking to openDemocracy, Timur said that employees' final month’s salary had not been paid in full after the salary calculation system was also blocked by Centerra. “We are still in shock. Employees have always had a good relationship with management, but, frankly, they’ve left us in the lurch.”
Centerra stated that it “paid employee salaries through mid-May as we were obligated to, at which point the Kyrgyz government took control of the mine, making it responsible for the health and safety of employees and all wage payments.
“None of the Centerra Gold systems prevent the government agents who are now in control of the mine from paying workers in full and on time.”
Since state management has been introduced at Kumtor, the mine’s operating principles have not changed, but, Timur notes, tension among employees is growing. Workers want to know how long the state will be able to bear the burden of running the mine. In recent years, working conditions have noticeably deteriorated, and now many are thinking about looking for a new job.
“There’s no difference who you end up working for. We know that it will definitely not get better,” Timur said.
“Most employees, whether workers or line managers, aren’t sure of their future or what’s happening now. Everyone is pessimistic. Most of all, we are worried about the fact that salaries will be reduced or the company will be closed altogether. At the same time, everyone has loans and large families to provide for. I’m already looking for another job. But the fact is that not everyone will be able to find one.”
What do the locals think?
Like the mine’s employees, the thousands of residents living in the area around Kumtor are equally concerned about the fate of the mine.
The village of Tamga, with its one-storey houses, rickety fences and unpaved roads, is home to 3,000 people. A couple of shops that sell everything from clothes to building materials mark the centre of the village. In addition to breeding cattle and selling crops from their own farmsteads, there is little else for people to do here.
Near one of the houses, a woman named Gulsina is diligently watering the flowers on her lawn, wearing a bright headscarf. Tamga has been her home for 20 years. According to Gulsina, the state of the environment in the villages around Kumtor leaves much to be desired. The tops of the mountains used to be completely enclosed in ice, but that’s no longer the case. Intense melting has led to local residents facing a water shortage.
“The ecological situation in our village is getting worse every year, and there is less and less water. There are practically no glaciers left. Because of this, the river is almost empty, there is hardly enough water for the fields,” Gulsina says.
“We drink water from the river and this affects our health. Many have poor eyesight, sore joints. Most of all I feel sorry for the children. We don’t know how healthy they will be, given this whole situation. But the Kumtor people still help us more than the state, and provide many people with jobs,” she adds.
Gulsina has yet to make up her mind to sell her property and leave Tamga, though her relatives have been living in Bishkek for a long time.
Another resident, 58-year-old Pavel, has his own guest house in Tamga, which he opened more than 15 years ago. More often than not, the rooms are empty, but in the summer foreign tourists travelling along the southern shore of Issyk-Kul come to stay. Pavel also does not want to think about moving to another place: his business is based on his love for his native land and memories of his family.
Like other local residents, Pavel is aware of everything that happens at the gold mine. He, like Gulsina, agrees that gold mining at Kumtor has contributed to environmental problems in the village, but says it is wrong to only blame the mine.
“There is a twofold situation here. You can’t say that all the problems come from Kumtor. Of course, it brings profit to the state, but at the same time, its activities have a bad effect on our glaciers. But gold’s not worth spoiling the environment for. Every human intervention in any case has a negative impact on nature,” he says.
“When heavy trucks are moving, a huge column of dust is raised and deposited on glaciers and vegetation”
Local residents are concerned about excessive dust on the service road leading to the mine. This problem has been talked about for several years, but the situation is still unchanged.
“When heavy trucks are moving, a huge column of dust is raised and deposited on glaciers and vegetation,” Pavel says. “But we get our water from these glaciers. Not all houses have drinking water, so for now we are taking water from the river, which then stagnates. But we still don’t know how safe it is. Of course, this raises concerns.”
Centerra states that it “regularly analyzed water quality at more than 30 sampling points in the area and never found evidence of contaminants in the drinking water”, and set up drinking water infrastructure for more than 40,000 people in the local area.
“We'll have to fight for our water”
The village of Barskoon is only nine kilometres from Tamga, but you see the difference in living standards immediately. The buildings are of better quality, on several streets you can even see mansions, and all the roads are covered in tarmac. Almost every local resident has a car. And there is an explanation for this: more than 30% of Barskoon’s 10,000 residents work at Kumtor. The average salary at the enterprise is $1,500 dollars for a two-week work session.
On the side of the road that runs through the Barskoon valley and leads to Kumtor, an elderly man in ak kalpak, the traditional Kyrgyz headdress, is carefully examining the endless lines of the mountain ranges. Israil has lived in Barskoon since birth. Twenty three years ago, he was one of the villagers who suffered from a disastrous cyanide spill.
In May 1998, a Kumtor truck carrying 1,740 kg of sodium cyanide fell off a bridge into the Barskoon River. This led to the deaths of two people, and 2,000 residents of the Issyk-Kul region were directly affected, while 17,000 patients received medical assistance. The authorities stated that the scale of the cyanide leak was insufficient to cause serious damage to the ecology of the region, but according to local residents, the poisoning had a strong effect on human health.
Israil, like other residents, believes that after the accident the water was disinfected with chlorine, as a result of which people were poisoned by cyanogen chloride, a toxic chemical compound.
“When the accident happened, many people had different types of wounds. Some had peeling skin, and some had signs of poisoning,” Israil recalls.
“People didn’t know that you couldn’t drink this water, or water the garden with it. My wife had weeded our potatoes, and she developed allergies all over her body. Doctors diagnosed scabies. But she had sores that felt like needles when touched. My eyesight deteriorated sharply. They were in a terrible condition. The village was almost dead. The dogs didn't even bark.”
When asked about how Kumtor affects life in Barskoon today, Israil cites poor air quality in the village. “Our main problem is air. My sister lives in the Ton district. When she comes to visit us, it becomes difficult for her to breathe. A lot of dust from the mine comes to our villages with the wind. Perhaps this is the reason for the poor air quality.”
In its 2019 environmental report, the company states that it waters the technical road regularly to keep dust down, and collects data about dust levels.
The climate in the area has also become drier, Israil says: it rarely rains, and less and less snow falls every year. Residents blame Kumtor for this. But there can be no question of closing the enterprise, Israil adds. Otherwise, thousands of people will suffer. For many families, working in the mine is their only source of income. “It is impossible to close Kumtor at the moment. Many of our villagers work there, receive good wages and provide for all relatives. We simply cannot live without Kumtor,” he says.
It is obvious that attitudes to Kumtor in villages along the lakeside can vary. Some people are in favour of protecting the enterprise on economic grounds; but there are also those who believe that gold mining at the mine negatively affects the ecology of the southern shore of Issyk-Kul. This point of view is also shared by the inhabitants of the village of Saruu, 40km from Barskoon.
"If I dig potatoes in someone else’s garden, then I must somehow thank the owner of this garden. It’s the same with Kumtor: if they are in our territory, they should help people living here"
In Saruu, Kumtor has repeatedly caused discontent among local residents. From 2013 to 2014, Saruu residents participated in rallies including in Karakol, a nearby town, and the capital Bishkek. Protesters set up roadblocks and, on one occasion, managed to enter a local power station and briefly cut off the electricity supply to the mine. Their main demands were an increase in social assistance and the nationalisation of the gold mine. A court later sentenced eight protesters to prison, despite claims that they had been tortured in custody.
Today, about 6,000 people live in Saruu. Small one-storey houses stand in a row along the road, cars rushing past them at high speed. Cattle graze on the side. Children run across the road from time to time, chasing one another.
Under the scorching sun, a man is standing near a tyre repair station. This is 56-year-old Kubanychbek. He watches intently as his children ride their bicycles on the road. A musicologist by profession, Kubanychbek has lived in Saruu all his life.
According to Kubanychbek, the majority of villagers have negative views on the Kumtor mine, which, he believes, has had little positive effect on Kyrgyzstan’s prosperity.
“This year there is no harvest due to the almost complete absence of irrigation water, although there used to be a lot of it,” says Kubanychbek.
“Fields are catching fire. Apparently, soon we will have to fight for water. My friend raised this issue under the old president, Atambayev, and we went to rallies. But the Kumtor leadership and our government worked against the people. And now we ourselves must somehow sort out the problems that they have created.”
“If I dig potatoes in someone else’s garden, then I must somehow thank the owner of this garden. It’s the same with Kumtor: if they are in our territory, they should help people living here, especially in terms of social assistance. We have broken roads, bad hospitals. But they were not interested in this. Yes, several thousand people work there, but what is more important: saving the environment or an enterprise that destroys this same environment?”
According to Kaliya Moldogazieva, an ecological expert who also served on two state commissions on Kumtor in 2005 and 2012, the mine does have an unwelcome effect on villages located along Issyk-Kul due to the open-cast method of mining.
“Every day 17 tonnes of explosives are used in mine blasting. The dust from the ore is deposited on nearby glaciers and, possibly, covers the villages. There are certainly deviations from the norm. But research on air quality in this area has not yet been carried out. Another source of air emissions is road dust on the operations road. It needs to be repaired regularly, the coating must be changed, but no one does this. Most likely, all this put together affects the life and health of local residents,” Moldogazieva told openDemocracy.
On a national scale, Kumtor carries even more risks, said Moldogazieva. The Petrov lake, which is constantly growing due to the intense melting of a glacier by the same name, could overflow. If that happens, then the dam located below the tailings site, which stores more than 90 million cubic metres of chemical waste left after extracting gold from ore, could burst. In the worst case scenario, the leak would lead to groundwater pollution, and tonnes of toxic substances could enter the Naryn River.
“In the case of Kumtor, the anthropogenic impact has been superimposed on global climate change,” said Moldogazieva. “In addition to the Davydov and Lysy glaciers, the Petrov, Bordeaux and Sary-Tor glaciers are located in the immediate vicinity. It is possible that the melting of these glaciers may accelerate. In addition, the production processes at the mine can create unexpected natural phenomena, such as mudflows, floods, avalanches and landslides.”
Moldogazieva continued: “it is not known what the environmental policy will be under the new [state] control at the mine and whether production standards will be followed. The only way to minimise all risks is to reclaim and close the mine as soon as possible.”
The authorities are not planning on closing Kumtor any time soon. In fact, the government of Kyrgyzstan is interested in extending the mine’s operation as far as possible, according to Dinara Kutmanova, chair of the State Committee for Ecology and Climate. A trained ecologist, Kutmanova was previously a leading member of the Kumtor state commission from 2012 to 2013.
“To dig a pit on such a huge scale and then give up development halfway through is not a smart approach,” Kutmanova told openDemocracy. “Since we have begun to develop the field, we need to use all available resources as efficiently as possible. Thanks to exploration work, the life of the mine will be extended until at least 2031. The main thing is that the development is not accompanied by violation of environmental standards and requirements.”
According to Kutmanova, future operations at Kumtor will be organised according to Kyrgyzstan’s environmental legislation, but she gave no specific timeline. It seems Kumtor will remain an open-cast rather than underground mine for the time being.
“The method of mine development will remain open-cast, although back in 2008 the company should have switched to underground mining,” Kutmanova said, noting that Centerra tested underground mining at a cost of $180m, but then ended the tests on the grounds that it was not profitable. “As a result, the company opted to destroy the glaciers,” she said.
“An action plan for environmental protection is being developed, and it must be implemented without fail. Measures will be taken to gradually switch to underground mining. In addition, the issue of the possibility of using technologies to extract 106 tonnes of gold from tailings is being considered. This requires time and financial resources, so the mine must operate smoothly,” Kutmanova assured.
Whether the Kyrgyzstani state can manage the country’s largest gold mining enterprise transparently and efficiently is a question that remains open. In the meantime, this much is clear: Kumtor has been operating for 30 years, but despite the promises of previous governments, has not become a panacea for poverty in Kyrgyzstan. We don’t know how the country could have developed differently if the mine had never come online, but many are confident that Kyrgyzstan could survive without Kumtor.
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