London Bullion Market Association (LBMA) has temporarily excluded Kyrgyzaltyn, a state-owned gold mining company in Kyrgyzstan from the Good Delivery List, Interfax news agency reported citing the LBMA.
Given that large banks, which are dominant players in the precious metals market, prefer to make business with producers from the Good Delivery List, Kyrgyzaltyn no longer has full access to that international marketplace.
«With effect from today, 17 September 2021, Kyrgyzaltyn JSC has been suspended from the LBMA Good Delivery List for failing to meet the requirements of the Responsible Sourcing Programme. All production from the refinery will no longer be accepted as Good Delivery from this date,» the association said in a statement posted on its website.
In May Kyrgyz government nationalized Kumtor gold mining field, which for decades had been explored by Canadian Centerra Gold Inc. In turn, Kyrgyzaltyn reprocesses gold ore from the field. Also, the company is a large owner of Centerra Gold. The expropriation of Kumtor wasn’t the only unusual move by the government, according to the WSJ edition. For example, Kyrgyzstan tried to intervene in the business activity of Kumtor Gold Company (former operator of the Kumtor field and subsidiary of Centerra). A Kyrgyz court has even issued a rule that bans U.S. and Canadian lawyers to represent the mining field’s interests in the territory of the U.S. and Canada.
On July 8, Kyrgyz authorities put ex-presidents Askar Akayev and Kurmanbek Bakiev on a wanted list. They are accused of corruption after they had signed a deal with Canadian Centerra Gold over the Kumtor field. Currently, the government of Kyrgyzstan is a big stakeholder of that company.
Kumtor is the largest investment project in Kyrgyzstan. In 2020 it generated 60% of Centerra Gold revenue. The company used to own and manage the field via its subsidiary, Kumtor Gold Company. However, in May the government recalled the company’s license and took control over the mining field citing environmental and financial concerns. Centerra insists that there were no violations of the country’s legislation and has initiated international arbitration. Nevertheless, on May 31, Kumtor Gold company announced bankruptcy.
Kyrgyzaltyn was established on October 15, 1992, as a state concern in the area of gold mining. The company also owns several subsidiaries including Makmalzoloto, Solton-Sary and Tereksay mining fields, a gold refining plant, 27% share in Centerra Gold and several non-core assets.
According to the financial statements of the company, in 2020 Kyrgyzaltyn’s assets rose by 67% to $960 million; liabilities rose by 78% and reached $3.9 million. At the same time, the company was able to increase its revenue by 25% to $14 million.
