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Kyrgyzstan: Official “Alarmed” by Falling Gold Production

A decrease in output at Kyrgyzstan’s largest gold mine may do serious harm to the country’s economy, which depends on Kumtor for roughly 12 percent of its GDP and significant tax revenues, say officials.

This week, Toronto-listed Centerra Gold downgraded its production forecast for 2012 by about a third thanks to ice and waste formations that grew in the high-altitude open-pit mine during a workers’ dispute last month, Reuters reports.

Centerra, which is one-third owned by the Kyrgyz government, had expected to produce 575,000 to 625,000 ounces of gold at Kumtor this year. It now hopes for approximately 400,000 ounces.

Ice began to form during the 10-day strike, the company said in a March 27 statement, warning that any further disruptions – either another walkout or roadblocks, which nearby communities commonly employ to demand concessions – “could have a significant impact on Kumtor achieving its revised forecast production.”

On March 29, Temir Sariev, minister of economy and antimonopoly policy, said he was “alarmed” by the new forecast, adding that the national budget depended on output similar to 2011, when the mine produced 583,156 ounces of gold. The deputy head of the National Bank said falling production would hurt overall GDP in 2012.

Kumtor accounts for approximately 54 percent of Kyrgyzstan’s industrial output. Any change in production has immediate and tangible effects on the country's economy: Last year, a week-long roadblock drove down year-on-year GDP growth from 8.5 percent for the first 11 months of the year to 5.7 percent by year's end, according to the National Statistics Committee.

Kyrgyzstan: Official “Alarmed” by Falling Gold Production

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