Issyk-Kul, Kyrgyzstan

Following the collapse of the Soviet Union in 1991, the World Bank and the European Bank for Reconstruction and Development (EBRD) advised the Republic of Kyrgyzstan to exploit its gold deposits and privatize the mining industry. Over the period 1995 to 2001, 55 percent of foreign direct investment was concentrated in the mining sector.

The Kumtor gold mine is located in the remote Tien-Shan Mountains. Credit: EARTHWORKS

The largest investment has been in the Kumtor gold mine, located 4,000 meters above sea-level in the permafrost and glaciers of the Tien-Shan Mountains.The Kumtor Gold Company (KGC) started as a joint venture between Kyrgyzaltyn, the state's gold mining agency (two-thirds ownership), and Cameco Gold (one-third ownership), a Canadian mining company and subsidiary of Cameco Corporation. But in January 2004, the two owners agreed to transfer all of KGC to a new Canadian company called Centerra Gold, the majority of which will be held by Cameco Gold following the public offering on the Toronto Stock Exchange.

Local villagers have suffered illnesses from exposure to toxic chemical spills. Credit: EARTHWORKS

Hailed as a project that would "demonstrate to the international community the viability of mining projects in the Central Asian region," this $452 million project received funding from various international financial institutions, including the EBRD, the U.S. Overseas Private Investment Corporation (OPIC) and the World Bank's Multilateral Investment Guarantee Agency (MIGA) and International Finance Corporation (IFC). While the Kumtor mine has propped up the Kyrgyz economy for the last several years, it may prove to be a temporary solution, with an estimated life span of around 11 years; the mine is expected to begin closure around 2008.

Furthermore, the mine poses a serious threat to nearby communities and the environmental health of the region as witnessed by an accident in May of 1998 when a truck crashed through a bridge near the village of Barskaun and dumped over 1.7 tons of sodium cyanide (and 935 kg of cyanide) into the Barskaun River. The company did not notify residents of Barskaun, who use the water for drinking and irrigation, until 5 hours after the accident. As a result, over 2,500 people were poisoned, 850 people were hospitalized and at least four of those patients died, according to CEE Bankwatch Network.

Lake Issyk-Kul is Kyrgyzstan's leading tourist attraction. Credit: EARTHWORKS

For weeks, villagers exposed to the cyanide and the sodium hypochlorite that was used to treat the water and soil after the spill reported skin rashes, sores, and other ailments. Panic spread among the affected communities due to a lack of reliable public information about the impacts of these chemicals. Revenues sharply declined at nearby Lake Issyk Kul, Kyrgyzstan's most popular tourist attraction amid fears of contamination. Though estimates of the total damage resulting from the spill range from US $20 to 42 million, the mine reached an agreement with the Kyrgyz government to pay a mere US $4.5 million.

Despite the preventative measures that the IFC assured would be taken as a result of this incident, two more accidents occurred at Kumtor: one in July of the same year, resulting in a spill of 70 liters of nitric acid, and the other in January of 2000 when a truck spilled 1,500 kilograms of ammonium nitrate. And, in July of 2002, a Kyrgyz worker was killed when a 200 meter-high pit wall collapsed on him.

Fed up with the damage the mine continued to cause nearby communities, protesters temporarily blockaded the only road leading to mine in May 2007, demanding the company protect local ecology and hire workers from the community.¹Kumtor, which the government is in talks to nationalize, is also under investigation for tax fraud.²

According to the Ministry of Environmental Protection, the mining sector is considered to be the main source of air and water pollution in Kyrgyzstan. As of 1995, 3,000 hectares of land were directly damaged by mining activities. Tailings dumps containing nearly 100 million m³ of waste (two million m³ of which is radioactive) are located in areas prone to natural disasters such as earthquakes and landslides. As noted by CEE Bankwatch Network in Mountains of Gold, "Most Kyrgyz mines during their lifecycle neglect the particularities of the mountains' ecosystems...Such carelessness of mining practices very often lead to unprecedented environmental and social outcomes."

1. "Blockade lifted on road to Kumtor gold mine in Kyrgyzstan." Central Asia General Newswire. May 14, 2007.
2. "Centerra faces tax probe as MPs call for Kumtor's nationalization." Times of Central Asia. February 21, 2008

For More Information

Mountains of Gold: Kumtor Gold Mine in Kyrgyz Republic. CEE Bankwatch Network. May 2002.

The Kumtor Gold Mine: Spilling Toxics From On High. Doug Norlen, Pacific Environment and Resources Center. September 2000.