Gold speculation. How Jerooy becomes subject of political bargaining

Kyrgyz politicians have begun preparations for the 2020 parliamentary elections. Favorite tricks are used - loud statements, populism and demands to revise agreements on large projects.
There is a new reason this year: Jerooy field is being prepared for launch. No one recalled the project for two years, and now, they suddenly became concerned about the absence of a state share in it.
How Jerooy was sold and what was left unsaid
Jerooy field was discovered in 1969. Geological exploration was conducted there in 1974-1984. Construction of the infrastructure of the mine began in the Soviet period.
Jerooy is the second largest gold deposit in Kyrgyzstan after Kumtor. Its balance reserves are 80 tons, off-balance - 16.6 tons.
For many years, various companies have been trying to start development of the field. But it all ended in failure.
At 2015 auction, a license for the right to develop the field was sold for a record amount for Kyrgyzstan - $100 million. It was paid by Vostokgeoldobycha (a subsidiary of Russian Platinum Group of Musa Bazhaev).
Related news Jerooy gold deposit. Promises of state and realities The license redemption was supplemented by an obligation to resolve an international arbitration dispute with the former holder of the license - the Kazakh Visor Holding.
The company complied with all the conditions and founded its subsidiary in Kyrgyzstan - Alliance Altyn. It started construction of facilities at the field.
Only then it was found out that the investor bought the right to develop subsoil, but did not purchase the right to use the land. Officials preferred to keep silent about this during the contest. As a result, Alliance Altyn solved the problem independently.
And this is not the only problem. Officials promised that the field has a power line and roads. In practice, both had to be rebuilt.
Get share in the project
Almost four years, while the company had been solving problems with land allocation and has been built, neither the state, nor the public, nor politicians particularly remembered about Jerooy. Everything has changed this year. Stripping work is planned to begin at the field in late October and early November. Construction of a gold processing plant is almost completed.
As it became clear that the project is entering the stage of gold mining and making a profit, some people appeared there, who would like to revise the agreement.
At the end of September, activists announced that $ 100,000 from Bakubat Talas fund have been spent to hold the National Nomad Games in Talas. Social activists wanted to hold a kurultai and discuss three issues at it: the legality of competition for Jerooy, state share in the project, and amendment to the law on natural resources.
As a result, the kurultai was canceled due to rumors about possible provocations.
However, heating up of the situation continued. At the beginning of the week, the ex-Prosecutor General of Kyrgyzstan Azimbek Beknazarov said that the Prime Minister Mukhammedkaly Abylgaziev had promised to resolve the issue with a state share in the project.
The Government, however, immediately refuted the statements of the politician.
The Spokesman for the Prime Minister Adilet Sultanaliev said that Azimbek Beknazarov did not correctly interpret the words of the Prime Minister.
"Mukhammedkaliy Abylgaziev noted that Alliance Altyn company and the Government strictly complied with all conditions of cooperation. This is extremely important for the investment climate. Another thing is that the Cabinet carefully monitors the implementation of all environmental and technical standards at Jerooy. The Government will maintain continuity and will strictly follow the terms of the agreements," Adilet Sultanaliev said.
How to break obligations? There are options already
Despite the position of the Government, anyone hardly doubts that the topic of revisal of the terms of development of Jerooy deposit will leave the agenda in the near future.
The day before, for example, representatives of the Association of Miners said that state's joining the Jerooy project would bring only benefits.
Two options were proposed: establishing a state share in the project or an additional tax on gross income, following the example of Kumtor.
"Recently, political structures, including the people's kurultai and youth organizations, have been asking: why is there no share of Kyrgyzstan in Jerooy? To mitigate the situation, we propose creation of a working group by decision of the Cabinet and to start negotiations. It is necessary to study how much the country will get if there is a share in the project. The second option is to introduce a deduction of a certain percent of the gross income of the company to the budget of the republic," said Duishenbek Kamchybekov.
According to him, the association's specialists, even at the stage of preparing a tender for the sale of the license for Jerooy, spoke about the need for a state share in the project.
Earlier, companies took into account the historical costs of the state for exploration of the field of $ 40 million and the costs of Kyrgyzaltyn of $ 10 million
Duishenbek Kamchybekov. Related news How Russian Platinum solved Jerooy problems But he forgot to add that not a single company launched the project. And the investors have paid $ 100 million exactly for the license for Jerooy for the first time in the history of the country. But is it really important if you want to squeeze the maximum out of the investor?
"We believe that we need to introduce a state share. We are afraid that the project will be used for other purposes by other politicians and they will stop it. Young people may again raise the issue of the lack of a state share in the project," said the Deputy Chairman of the Association of Miners.
Simply put, the state was offered to concede its powerlessness, inability to protect the investor and openly violate obligations.
Officials like to say that they have drawn conclusions from years of bargaining around Kumtor. Looking at the situation around Jerooy, one gets an impression that the conclusions concern only one thing - how to turn any project into a topic for political bargaining.