ARAL, Kyrgyzstan (Reuters) – South African miner Gold Fields hopes an exploration deal in Kyrgyzstan has bought time to findsomething just as valuable as the copper and gold it seeks: thesupport of the local population in this volatile corner of CentralAsia. Its joint venture in the former Soviet republic has resumeddrilling eight months after horsemen armed with petrol bombs andsticks stormed its remote camp, beating a security manager andissuing death threats to local residents. The world’s fourth-largest gold miner now plans to replicate itsexperience in the Peruvian Andes, where it built a mine in a regionwhere community opposition disrupted rival projects. “We’ve learnt over the last five years that it’s criticallyimportant to get community support for projects,” Gold Fields ChiefExecutive Nick Holland told Reuters. “It’s probably even moreimportant than government support in the first instance.” Faced with growing resource nationalism in developed nations andstable emerging markets, international miners are venturing intoincreasingly risky environments in search of their next bigdeposit.
Countries previously off-limits are now on their radar. Though Soviet geologists identified hundreds of metal deposits inKyrgyzstan, only one major mine – Centerra Gold’s Kumtor – has beenconstructed in the two decades since independence. That mine contributed 12 percent of GDP and more than half ofKyrgyzstan’s exports last year. But even Kumtor has had itsproblems as protesters have sporadically disrupted production byblocking the roads that carry crucial supplies to the mine. Revolutions have unseated two Kyrgyz presidents since 2005.
Thecountry, which is on a drug trafficking route out of Afghanistan,ranked near the foot of Transparency International’s latest183-country Corruption Perceptions Index. Almazbek Atambayev, who in December became the first Kyrgyz leaderto assume the presidency without a revolution, has vowed to weedout corruption, which includes the trading of licences for minesthat are not developed. New legislation requiring public auctions of new mining concessionshas yet to be tested. More important, development of new mines mustovercome strong local opposition in communities such as Aral. Branded Headphones
The farming community of 5,000 people, in a valley 260 km (163miles) west of the capital Bishkek, is the closest settlement tothe four exploration licences held by Talas Copper Gold. The joint venture, which Gold Fields operates with Toronto- andAIM-listed Orsu Metals, has spent about $20 million over five yearsand holds the rights to explore the region until the end of 2015. “This is mainly a copper project, but there’s also enough gold towarrant interest,” chief geologist Viktor Adyrkhayev said. “Giventhe volumes of ore, the project would take no less than 10 yearsand would require around 2,000 employees.” Many residents of Aral are worried, though. Who will get thesejobs? And how will mining transform their community? While theKumtor mine is hidden 4,000 metres above sea level, far from thenearest settlement, Aral is only 2 km from the company’s camp. Logitech UE Headphones
Nurkali Abdyldayev, a 48-year-old mathematics teacher in thevillage school, said he was concerned that blasting at the pit andconvoys of ore-bearing trucks would disrupt pastoral life. “The deposit is very close to the village. We want to live in aclean home.” His voice rising, he added: “Our state is corrupt.They will plough everything out from under us and leave.” RECONCILIATION Opposition to the project boiled over in the early hours of October8, when local men rode on horseback into the camp. The securitymanager was beaten as he fled a burning farmhouse. It was thesecond attack on the camp within a year. Apple Earpods Headphones
Unable to guarantee the safety of local residents in the face ofsubsequent death threats, the company ceased drilling and beganwork instead on an agreement with the local community. The agreement, signed in January, gives local residents prioritywhen staff are recruited and will compensate landowners for anydamage that may occur in the course of drilling. In return,residents agreed to resolve any disputes through talks. There is a twist in the tale.
Three suspects were detained by localpolice. After discussions within the community, six more local menconfessed to the attack and agreed to refurbish the burnt-outfarmhouse at their own expense. The nine men appeared in court in January. Eight were put on threeyears’ probation, and charges against the ninth were dropped. TalasCopper Gold withdrew its compensation claim and has hosted the menat the camp as they rebuild the farmhouse.
David Grant, general director for Gold Fields Kyrgyzstan, said thatresolution of this conflict, including rebuilding the house, was “astrong, visible sign of reconciliation, which indicates that thisproject has much more positive times ahead”. Holland said he believed environmental concerns were the root oflocal opposition, even though some mining executives in Kyrgyzstanhave blamed officials for whipping up anti-mining sentiment forpolitical gain. “We don’t believe there’s any clandestine objective to drive peopleout. There’s genuine concern: it’s a pristine area and they want tomake sure mining is done responsibly,” he said in a telephoneinterview from Bishkek after meeting the president.
“People have been opposed to mining because they haven’t understoodthe benefits,” he said. “It’s a fledgling industry in thiscountry.” The example to follow in Kyrgyzstan, said Holland, was the CerroCorona mine in Peru. Gold Fields built the mine in the volatileregion of Cajamarca, where mass protests have stalled NewmontMining’s $4.8 billion Minas Conga project. “It took two years of detailed collaboration and discussion,”Holland said.
“We’ve trained a lot of people who are operating themine for us. We used a lot of local contractors to help build themine.” ENVY At Taldybulak, the most prospective of its four licence areas,Talas Copper Gold will drill holes to a depth of 800 metres, up tothree times deeper than the Soviets ever searched. A scoping study released in 2010 envisages an open-pit mine thatwould produce a copper, gold and molybdenum concentrate. The totalestimated resource is 11.7 million ounces of gold equivalent,although these resources are not proven. Pensioner Erkinbek Malayev chairs the committee formed this year torepresent the community’s interests and act as a go-between withthe company.
While agreeing to drilling, he is not convinced a minewill be in the best interests of the village. “It’s not worth continuing this project if it harms the village,”he said. “People are thinking of their children and how they willlive.” But many in Kyrgyzstan see mining as the quickest route out ofpoverty for an economy subsidised by cash sent home by hundreds ofthousands of migrant workers. Per capita GDP is less than a tenthof that in oil-rich neighbour Kazakhstan. “If the people decide Kyrgyzstan has no other route to development,we need to do this.
We cannot live forever in debt,” said Malayev.”We watch TV. We see how other countries live, and we envy them.” Thomson Reuters 2012 All rights reserved SUBSCRIBE to Mineweb.com’s free daily newsletter now.