Kyrgyz villagers demanding land and jobs blocked the only road to Centerra Gold's Kumtor mine on Thursday, the latest in a series of disruptions that could jeopardise gold production crucial to the fragile economy of the Central Asian state.
John Pearson (R), Centerra Gold company's Vice President Investor Relations, looks on at the gold-mining plant at the Kumtor mine in Kyrgyzstan May 31, 2011.
More than 100 members of a national youth movement stopped miners and fuel supplies from entering the gorge that runs to the mine, which contributed nearly 12 percent of Kyrgyzstan's gross domestic product last year, witnesses and officials said.
"The road is blocked," said Sergei Dedyukhin, a spokesman for Kumtor Operating Company, the local unit of Centerra Gold. "Foreign employees coming down from the mine are not being allowed to pass and are having to return to the mine."
The economy in Kyrgyzstan, a mountainous former Soviet republic where per capita GDP is less than a tenth of that in neighbouring Kazakhstan, relies heavily on Kumtor's gold production and remittances from migrant workers.
One of the highest altitude gold mines in the world at nearly 4,000 metres above sea level, Kumtor contributed more than half of Kyrgyzstan's export revenue last year.
Toronto-based Centerra Gold has said any repeat of a 10-day strike in February could jeopardise the mine's ability to meet a 2012 output target, which has already been reduced by a third due to ice movement in the high-altitude pit.
Naris Kalchayev, a local leader of the Kyrgyz Youth Council, said the blockade would continue until the company responded to demands for environmental protection and the return of 16,000 hectares of land to the local region.
He estimated the number of protesters at 200 to 250 and said cars leaving the mine were being allowed passage. Trucks carrying miners and fuel in the other direction, however, were being stopped.
Dedyukhin said the number of protesters was 100 to 150 and that their demands included new jobs and the revision of the current ownership agreement. The Kyrgyz state owns 33 percent of Centerra Gold, which also produces gold in Mongolia.
Kyrgyz President Almazbek Atambayev, in power since December, aims to attract investment to develop new mines in a country where Soviet geologists mapped potential reserves of gold, copper, mercury and coal.
His spokesman, Kadyr Toktogulov, said the president had expressed concern about the latest blockade and said community action should not harm the country's economy.
"Dissatisfaction should be expressed by means other than disrupting the work of one of the country's key enterprises," Toktogulov said.
Unionised employees at Kumtor went on strike in February over salary deductions for payments to Kyrgyzstan's social fund. Centerra Gold said on Feb. 16 it expected the settlement to cost about $4 million this year.
That dispute followed a brief disruption in December, when protesters interrupted supplies to the mine by blocking a road near the company's marshalling yard. That dispute was quickly resolved by a deal for community involvement.
Centerra Gold forecasts gold output of 390,000 to 410,000 ounces this year, down from its previous estimate of 575,000 to 625,000 ounces. Kumtor accounted for over 90 percent of the 583,156 ounces produced by Centerra last year.
In a separate statement on Thursday, Kumtor Operating Company said it had transferred an additional $30 million to the Kyrgyz budget this week, responding to a government request to pay part of its gross revenue tax in advance.
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