 Mining, the golden sector |
Dating back to Soviet times, Uzbekistan has always boasted top positions with regard to mining. The country produced most of the Soviet Union's uranium, and its gold was known to be the best, as were gold mining specialists themselves. With a developed infrastructure and experienced workforce, today mining contributes by far the most towards the country's economy. It contributes 20% of the country's GDP and employs eight percent of the workforce.
Uzbekistan's proven natural resources, including gold, uranium, oil and gas, which are the country's primary resources, are valued at more than one trillion USD. This is less than one third of Uzbekistan's total estimated mineral wealth, both proven and unproved, which has been valued at $3,5 trillion. Only less than half of it is being mined to date, mostly in the form of gold and uranium.
It has been estimated that there are 5 000 tons of gold underground, making Uzbekistan the fourth largest deposit holder in the world. Towards the end of the 90's, gold production increased considerably, making Uzbekistan the ninth largest gold producer in the world. Predictions show that production will increase from 50 tons to 120 tons of gold per annum in the near future with the introduction of new technology and equipment. The Navoi Metallurgical and Mining Combinat, Newmont Mining, and Oxus Resources Corporation are presently contributing towards the growth of the mining sector in Uzbekistan by introducing modern technologies and state-of-the-art equipment. The Navoi Metallurgical and Mining Combinat is also very involved in quality and technology research, especially with Russian experts, working on improving the technology, thus increasing the confidence of Uzbekistan's mining sector on the international market. The refined gold produced by Uzbekistan, considered to be the "purest" is guaranteed at 24,75 carats and measured at a purity of 99,9. Moreover, Uzbekistan's gold also has optimal seller status, shipped to London and Tokyo's over-the-counter markets.
The Navoi Metallurgical and Mining Combinat, specialising in gold and uranium production, started operating in Uzbekistan long before the country's independence. As the seventh largest uranium seller in the world, and producer of 90% of the country's gold, Mr Nickolay Kuchersky, the Director General of the Navoi Mining Combinat, is very positive about the future of the mining sector: "I can confidently say that we have a clear vision of our perspectives. We are solving not only current problems but also future problems which involve launching new mines, new technologies, new types of products that are highly in demand in the world market." Over the past few years gold production has increased by 40% at the Navoi Mining Combinat, extracting more than 70 tonnes of gold last year. Moreover, future shows even further success to the Navoi Mining Combinat, since it recently opened a new mining enterprise in Uchkuduk, and two new mines, Daugiztau and Kokpatas are planned to go into production in the near future. The introduction of new technologies in Zarafshan, in the middle of Kuzylkum desert in the centre of Uzbekistan, and the new technologies that will be used in the two new mines will increase production by a further 20% in the next five years.
The $225 million Zarafshan-Newmont Joint Venture,
one of the first JVC's set up in Uzbekistan as early
as 1992, expects to process a total of 220 million
tons of low-grade ore from the waste dumps of the
open cast mine at Muruntau. The technology used
to process these low-grade stockpiles is known as
heap leach technology. The project was designed
to process 13,8 million tons per year.A 45% growth
in production in 2000 resulted in 500 000 ounces
of gold processed and a further 470 000 ounces in
2001. In fact, Newmont's experience in Uzbekistan
has been so successful that they are looking at
a second project called Angren, in the Tashkent
region. Mr.
Wayne Murdy, the President of Newmont
Mining Corporation realises that in order to
get the full benefits of the privatisation process,
a long-term commitment is needed. He continues that
so far government has been very helpful and encouraging
towards the mining operators, and Newmont is pleased
with the development "Eventually, we would
like to see privatisation of the mining industry
in Uzbekistan. I do not think that will happen tomorrow,
but it will eventually happen and when it does,
we would like to be a part of it." |
After much research and exploration, Britain's Oxus Resources Corporation is opening a brand new mine, the Amantaytau Goldfields, which will be the first mine in Uzbekistan to be opened with 100% foreign investment, estimated to hold approximately 350 tons of gold. Unlike Newmont, the first phase of this project will be open pit mining, later moving into a second phase involving the chemical extraction of ore. The Amantaytua Mine is expected to yield 170 000 ounces a year at a cost of $113 per ounce which is very good worldwide. Mining deposits in the southeastern parts of the country are rich in polymetallic zinc, silver, copper and lead. "I think that the investment climate at this point in time, for a mining company at least, is the best in Central Asia. You have a situation where both sides are satisfied by the results of the negotiations, in other words 'win-win'", says Executive Vice President and Director of Oxus Resources Corporation in Uzbekistan, Mr. Richard Wilkins.
In addition to the above mentioned major resources, Uzbekistan offers a wealth of other metals including silver, zinc, tungsten and copper all of which are presently being mined on a small scale but need to be modernised in order to develop. Production is presently rather low for two main reasons: firstly, a drop in the international market price for these metals does not make it viable to continue production in Uzbekistan and secondly, there is a dire need for working capital. There are however, sufficient reserves for the next 20 - 25 years at least. Other natural products produced by Uzbekistan are coal and substantial deposits of good quality marble in the Navoi region by Navoi Metallurgical and Mining Combinat.
Uzbekistan's highly developed mining industry offers a skilled and educated workforce and an established infrastructure. The low operating costs, which initially attracted Soviet miners to explore Uzbekistan, guarantee a high return on capital investments. According to Navoi Mining Combinat, Newmont Mining and Oxus Resources Corporation who are presently operating in the country, government representatives show complete co-operation and extreme professionalism in their approach to foreign investors. The mining of precious metals is expected to grow 2,7 times between 1997 and 2005, increasing export potential from $44 million to $123 million during that period.
Furthermore, the government, the mining sector included, is committed to the overall economic policy of moving gradually towards a free market economy. The Foreign Investment Program's provisions for a seven year tax holiday, a maximum rate of profits tax, exemption on importation of goods, customs, VAT, etc plus the low on site operating costs are definite attractions for foreign investors. |
