Kyrgyzstan

Kyrgyzstan Economy

Kyrgyzstan is a landlocked country situated in Central Asia on China’s north west border and is slightly smaller in size than South Dakota (198,500km²). The country has a highly educated (98.7% literacy rate) population of 5.2 million people and an economy that is dominated by primary and secondary industries, with agriculture and mining and industry accounting for 75% and 25% of GDP respectively. The capital city, Bishkek, is located in the north of the country and has a population of approximately 900,000 people. Bitumen roads and an in-country air service provide internal access between the key population centres.

Following the breakup of the Soviet Union in 1991, the former Kyrgyz Soviet Socialist Republic became an independent country and a member of the Commonwealth of Independent States. It has had a progressive start to its independence, being the first country in Central Asia to join the World Trade Organization (“WTO”), have its own currency, allow private ownership of land and promote liberal attitudes. The government has also worked hard to tackle issues such as inflation, which raised immediately post independence, but was estimated at only 5% in a recent survey. Current investment in the Central Asian region is now put at some US$20 billion indicating the level of foreign investor confidence and underpinning the foundation of a modern economic society. Comprehensive sovereign risk insurance is also freely available.

Mineral Resources in Kyrgyzstan

The country produces abundant hydroelectric power and has significant deposits of gold, uranium and rare earth metals, as well as other deposits of copper, mercury, bismuth. It also has minor deposits of coal, oil and natural gas.

The geology of Kyrgyzstan is dominated by the complex sequences that comprise the Tien Shan mountain belt. The mountains form an arc running through the country from west to east, with sub-parallel ranges separated by intermountain basins and valleys. The region identified today by the Tien Shan Mountains lies in a zone in which crustal movements, continental collision, accretion, subduction, rifting and arc development have all taken place repeatedly since the early Proterozoic. Several major linear metallogenic belts have been identified that represent ancient sutures that formerly separated continental blocks and identify the location of palaeooceanic basins. As a consequence of the tortuous history, the region has been exceptionally well endowed with mineral resources and hosts some of the greatest known gold deposits in the world, notably Muruntau (175Moz) and Kumtor (17Moz), Zarmitan (11Moz), Kokpatas (5Moz), Kochbulak (4Moz) and the giant Kalmakyr porphyry copper-gold complex that contains resources in excess of 70Moz of gold and 20Mt of copper. Numerous other gold and base metals deposits have been discovered in the Tien-Shan Belt, many of which are either being mined or still under investigation.

The Kumtor mine provides an excellent precedent of how the Kyrgyz Republic has transformed its economy and it’s commercialising the vast natural resources of the country.

The mine is located in the Tien Shan mountain range in the northeast of the country at an elevation of over 4,000m. It is operated by the Kumtor Operating Company, a wholly owned subsidiary of Centerra Gold Inc. The deposit was first reviewed by Cameco in 1992 and by 1994, a feasibility study had been completed and construction was underway. It is the largest gold mine operated in Central Asia by a western-based company, having produced more than 6.1Moz of gold between 1997 and the end of 2006. As of December 31st, 2007, Centerra’s proven and probable reserves totalled 4.9Moz of contained gold. Centerra’s measured and indicated resources totalled 3.6 Moz of contained gold.

The Kyrgyz economy is heavily weighted toward gold export. Kumtor accounts for 18% of GDP of the Republic and is operated with the co-operation of the Government under a legislated mining code and a ten year stability agreement. It is one of the largest investment projects in the region, with over US$450 million having been spent on its development.